CHINA REACT: Loan Prime Rates Drop, Cuts Ahead on Virus Hit

• China’s lending rates fell -- and more cuts are coming as the authorities move to shore up an economy that’s reeling from the coronavirus outbreak. We see the official one-year Loan Prime Rate – the reference for corporate loans -- falling another 30 basis points this year after Thursday’s drop of 10 bps.
• The one-year LPR fell to 4.05% from 4.15%. The five-year LPR, the reference for mortgage rates, was lowered to 4.75% from 4.80%. The reductions were in line with market expectations.
• The move came after the People’s Bank of China lowered the interest rate for its one-year medium-term lending facility by 10 bps to 3.15% on Feb. 17 -- signaling it would drive lending rates lower to support the economy.

(Source: Bloomberg)