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China’s Rate Cut a Big Surprise, ‘Without Doubt a Positive,’ Analysts Say

  • It’s a “big” positive surprise for equities: Chunbao
  • Mizuho Bank says cut in 5-year LPR is positive for yuan
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China Banks Cut Key Rate by Record to Boost Ailing Economy
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China’s move to slash a key interest rate by a record amount is improving the outlook for the nation’s assets as it raises hope that real support for the economy is starting catch up with policymakers’ rhetoric. 

The higher-than-expected cut in the five-year loan prime rate comes after the central bank earlier reduced the floor on the rate for new mortgages Sunday in an attempt to spur demand for new loans, which dropped in April. Extensive Covid control measures have wreaked havoc on the Chinese economy this year, depressing industrial output and consumer spending to the worst levels since the pandemic began.