(Sharecast News) - China cut its key lending rates on Tuesday, as widely predicted, as the country looked to shore up the economy amid heightened trade tensions.
The People's Bank of China lowered both the one-year and five-year loan prime rates (LPR) by 10 basis points each, to 3.0% and 3.5% respectively.

Both are now at the lowest level since 2019, when the LPR mechanism was overhauled.

The cuts, the first since October, were widely viewed as a response to ongoing weakness in China's domestic economy and the renewed trade war with the US.

Donald Trump unveiled his sweeping tariff regime on 2 April, upending global markets. He eventually rowed some of the more stringent levies back, but left China's at record highs.

Beijing also imposed its own reciprocal taxes on US imports.

The two countries agreed a 90-day truce earlier this month, with Washington pledging to reduce tariffs on Chinese goods to 30% from 145%, while Beijing said it would lower duties to 10% from 125%.

However, official data yesterday showed the issues facing the Chinese economy. Retail sales growth slowed in April by more than expected, while property prices continued to fall. Industrial production was in line with forecasts, however.

In addition to the central bank trimming rates, a slew of state-owned banks also cut their deposit interest rates on Tuesday, including Industrial and Commercial Bank of China, Agricultural Bank of China and Bank of China.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The PBOC has injected a dose of more stimulus into the economy, by cutting a key lending rate to a record low.

"It wasn't a surprise move. The aim is to try and revitalise the economy, by making borrowing cheaper to encourage investment and spending."

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