Surprise rate cut from China

The People's Bank of China has cut its benchmark interest rate. The People's Bank of China (PBOC) has cut its key short-term policy rate for the first time in almost a year. Following the repo rate, the People's Bank of China cut its benchmark lending rates (LPR) at the monthly peg by the same margin. The PBOC said on Monday that the seven-day reverse repo rate was cut by 10 basis points to 1.7%. Minutes later, China cut its benchmark lending rates at the monthly peg by the same margin. The one-year lending rate (LPR) was cut to 3.35% from 3.45%, while the five-year LPR was cut to 3.85% from 3.95%. Economists had not expected any change. "Today's cut is an unexpected move, likely due to the sharp slowdown in growth momentum in the second quarter, as well as the call at the third plenary meeting to 'achieve this year's growth target'," said Larry Hu, Macquarie's chief China economist.