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Interest rate cut to counter real estate worries

China’s central bank has cut a key interest rate to inject more liquidity into the country’s shaky financial markets. The Prime Lending Rate (LPR) fell to 3.8 percent from 3.85 percent. It was the first rate cut by the People’s Bank of China (PBoC) in nearly two years. Chinese monetary policy is thus running counter to the trend in the US. There, the central bank is aiming to increase the interest rate level due to inflation. The reason for the PBoC’s interest rate cut is said to be the continuing uncertainties in the Chinese real estate market. After the residential construction group Evergrande, its competitor Kaisa is also experiencing increasing difficulties. fin

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