China cuts key interest rate on home loans

Beijing China is looking to ease the current economic slowdown by lowering a key interest rate on long-term loans. The five-year prime rate, a benchmark for real estate loans, was cut from 4.6 to 4.45 percent, the Chinese central bank announced on Friday. Economists had expected a reduction, but to a lesser extent.

The rate cut is intended to boost demand for loans as weeks of coronavirus lockdowns and a real estate crisis weigh on consumer and business sentiment.

The restrictions imposed by China’s zero-Covid strategy are slowing down the world’s second-largest economy much more than expected. Industrial production surprisingly fell in April compared to the same month last year, as was announced in mid-May. Retail sales have also recently fallen more sharply than predicted.