(Yicai Global) June 20 -- China's central bank has lowered its loan prime rate, the country's benchmark lending rate to which mortgages, corporate loans, and fixed-asset investments are anchored, for the first time in 10 months.

The People's Bank of China today cut the one-year LPR by 10 basis points to 3.45 percent to help stabilize investment, consumption, and macroeconomic growth and promote the sound and stable development of the real estate market. The PBOC kept the over five-year LPR unchanged at 4.2 percent.

On June 13, the PBOC trimmed the seven-day reverse repurchase rate and the overnight, seven-day, and one-month standing lending facility by 10 bps each to 1.9 percent and 2.75 percent, 2.9 percent, and 3.25 percent, respectively.

Since the beginning of the year, the economy has picked up, but the recovery trend is not stable, Dong Ximiao, chief researcher at Merchants Union Consumer Finance, told Yicai Global. Effective financing demand is insufficient, and banks have more need to reduce costs and stabilize credit delivery, Dong added.

The Federal Reserve's decision to suspend interest rate hikes this month also provided a more accommodative external environment for China's monetary policy adjustment, Dong noted.

The cut of the over five-year LPR will push down the interest rate of newly-issued residential housing loans, help relax loan and home-purchase restrictions, increase support for housing provident funds, and promote the property market to recover stably, said Wang Qing, chief macro analyst at Chinese consulting firm Oriental Jincheng.

The downward pressure on the real estate market is huge, and buyers are not confident enough to purchase houses, according to Chen Wenjing, director of market research at the China Index Academy. If supportive policies can be further implemented in June, a key month in the mid-year sprint of property developers, then the market sentiment is likely to improve, Chen noted.

In addition to monetary policy, other policies will follow up in a timely manner, said Wen Bin, chief economist at Minsheng Bank. The downward pressure on the economy is expected to ease when the policy effects are released, Wen added, noting that the economic growth rate will bottom out in the second half.

In the next stage, the PBOC will maintain a moderately loose monetary policy and continue to increase financial support for stable domestic growth, according to Wang Yunjin, senior researcher at Zhixin Investment Research Institute.

Editor: Futura Costaglione