China lowers key interest rates by 0.25 percentage points.

• The People's Bank of China announced a reduction in the one-year loan prime rate (LPR) to 3.1%, and the five-year LPR has been decreased to 3.6%.
• In China, the one-year LPR affects both corporate and household loans, while the five-year LPR is used as a benchmark for mortgage rates.

On Monday, China decreased its main benchmark lending rates by 25 basis points during the monthly fixing.

The PBOC announced a reduction of the one-year LPR to 3.1% and the five-year LPR to 3.6%.

In China, the one-year LPR affects both corporate and household loans, while the five-year LPR is used as a benchmark for mortgage rates.

The loan prime benchmark rate would be lowered by 20 to 25 basis points, as indicated by China's central bank governor Pan Gongsheng on Friday during a forum held in Beijing.

Pan stated during the forum that the reserve requirement ratio (RRR) could be decreased by 25 to 50 basis points by the end of the year, depending on the liquidity situation. Additionally, the seven-day reverse repurchase rate will be reduced by 20 basis points, and the medium-term lending facility rate will be lowered by 30 basis points, as Pan pointed out.

The loan prime rate cuts in China confirm that monetary stimulus is happening on a significant scale, according to Shane Oliver, head of investment strategy and chief economist at AMP. Despite this, Oliver emphasized that the cut alone is not enough to revive the country's economy and urged for more fiscal stimulus.

"The lack of demand is the real issue in China, and that's why I believe fiscal stimulus is crucial," he stated.

In late February, the PBOC announced a 50 basis point reduction in China's reserve requirement ratio as part of a series of support measures aimed at stabilizing the country's economy, which is currently facing a prolonged property crisis and weak consumer sentiment.

In July, China surprised the markets by lowering its major short and long term lending rates.

China's third-quarter GDP growth of 4.6% year-on-year was slightly better than expected, and additional data released on Friday, including retail sales and industrial production for September, also exceeded expectations, indicating a hopeful sign for the country's struggling economy.