Analysis: Why China Is Tackling Economic Headwinds With Asymmetric Interest Rate Policy

In an effort to turn around the property slump and counter other economic headwinds, China slashed its key mortgage reference rate while keeping short-term lending rates steady. Some analysts attribute this asymmetric policy to concerns about further yuan depreciation.

The People’s Bank of China (PBOC) kept its one-year medium-term lending facility (MLF) rate unchanged in February at 2.5%. The policy rate usually affects benchmark lending rates, namely loan prime rates (LPRs).