SHANGHAI, Dec 20 Reuters China cut its lending benchmark loan prime rate LPR for the first time in 20 months on Monday, in a bid to prop up growth in the slowing economy, although it remains wary of loosening conditions in the country39;s highly leveraged property market.

The oneyear LPR was lowered by 5 basis points to 3.80 from 3.85 previously, while the fiveyear LPR remained at 4.65.

The reduction marks the first LPR cut since April 2020.

Twentynine out of the 40 traders and economists polled by Reuters last week predicted cuts in LPR.

Most new and outstanding loans in China are based on the oneyear LPR while the fiveyear rate influences the pricing of home mortgages.

The cut reinforces our view that authorities are increasingly open to cutting interest rates amid looming economic headwinds, said Xing Zhaopeng, senior China strategist at ANZ.

However, he noted the decision to keep the fiveyear rate unchanged showed Beijing preferred not to use the property sector to stimulate economic growth.

Some analysts said the central bank39;s two reserve requirement ratio RRR cuts this year have allowed institutions to lower their costs of lending, with the two cuts saving banks up to 28 billion yuan 4.39 billion, according to Goldman Sachs39; estimates. 

GLOBAL DIVERGENCE

While Beijing39;s move to lower the LPR was widely expected, it highlights China39;s monetary policy divergence from other major central banks, which are set to raise interest rates.

Some analysts…