SHANGHAI, July 22 Reuters China surprised markets by lowering a key shortterm policy rate and its benchmark lending rates on Monday, in efforts to boost growth in the world39;s secondlargest economy.

The cuts come after China reported weakerthanexpected secondquarter economic data last week and its top leaders met for a plenum that occurs roughly every five years.

The country is verging on deflation and faces a prolonged property crisis, surging debt and weak consumer and business sentiment. Trade tensions are also flaring, as global leaders grow increasingly wary of China39;s export dominance.

The cut today is an unexpected move, likely due to the sharp slowdown in growth momentum in the second quarter as well as the call for 39;achieving this year39;s growth target39; by the third plenum, said Larry Hu, chief China economist at Macquarie.

The People39;s Bank of China PBOC said on Monday it would cut the sevenday reverse repo rate to 1.7 from 1.8, and would also improve the mechanism of open market operations.

Minutes later, China cut benchmark lending rates by the same margin at the monthly fixing. The oneyear loan prime rate LPR was lowered to 3.35 from 3.45 previously, while the fiveyear LPR was reduced to 3.85 from 3.95.

Ju Wang, head of Greater China FX rates strategy at BNP Paribas, said that growing expectations for the Federal Reserve to start cutting interest rates also gave the PBOC room to ease its policy, given the pressure the yuan has been under…