More than £500 million has been wiped out by UK housebuilders as the recession deepens

China’s central bank has cut one key interest rate but left another on hold in a move that has baffled economists as the world’s second-largest economy tries to weather a post-Covid slowdown.

Activity has recently been dragged down by uncertainty in the labor market and the global economic slowdown, weakening demand for Chinese goods.

Growth in the real estate sector has been hampered by financial problems, with many leading developers on the brink of bankruptcy and struggling to complete projects.

The People’s Bank of China today cut the one-year lending prime rate (LPR), a benchmark for corporate loans, to 3.45 percent from 3.55 percent.

However, the five-year LPR, which is used to price mortgages, remained at 4.2pc, despite economists predicting a rate cut of 15 basis points following a similar cut to a key central bank policy lending rate last week.

Goldman Sachs economist Maggie Wei described the LPR cut as „disappointing,” adding that it „doesn’t help build confidence” as Chinese officials pursue economic recovery.

Zhang Shiwei, chief economist at Pinpoint Asset Management, said: “The decision to keep the 5-year unchanged is puzzling.

„It’s not clear how to explain this decision and last week’s cut.”

China stocks fell to a nine-month low as investors were disappointed by softer-than-expected measures to boost confidence.

Raymond Yeung, chief economist for Greater China at the Australia and New Zealand Banking Group, said: „The surprisingly holding five-year LPR is at odds with the overall policy tone of asset bailouts.

„This LPR hold will confuse the policy message market and dilute the sentiment impact.”

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Julian Evans-Pritchard, head of China economics at Capital Economics, said: „The PBOC’s approach to monetary policy is of limited use in the current environment and may not be sufficient, at least on its own. The big picture is a platform underpinning growth.”

He added: „But the disappointing follow-up from the MLF cut to the LPR reinforces our view that the PBOC is unlikely to accept the substantial declines needed to revive credit demand.”

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