China's Central Bank Cuts Key Interest Rates Following Fed Hike

China's central bank cut key interest rates on Monday, a day after the Federal Reserve raised interest rates by 75 basis points - the biggest hike since 1994.

The People's Bank of China (PBOC) reduced the one-year loan prime rate (LPR) - the rate at which banks lend to each other - by 10 basis points to 3.65%, and the five-year LPR - a reference rate for mortgages and other long-term loans - by 5 basis points to 4.3%.

The move comes as China's economy has been slowing in recent months amid COVID-19 lockdowns and a property market downturn.

The PBOC's decision to cut interest rates may help to stimulate economic growth by making it cheaper for businesses to borrow money.

The timing of the rate cut - one day after the Federal Reserve raised interest rates by 75 basis points - has raised some eyebrows.

The US central bank's move was intended to combat inflation, which is running at a 40-year high in the US.

But China's inflation rate is much lower, so it's unclear why the PBOC would follow the Fed's lead in cutting rates.

Some analysts believe that the PBOC's move is aimed at supporting the yuan, which has been weakening against the US dollar in recent months.

A weaker yuan makes Chinese exports more competitive, but it can also lead to inflation if imported goods become more expensive.

The PBOC's rate cut is the latest in a series of measures the central bank has taken to support the economy.

In recent months, the PBOC has also cut banks' reserve requirements, which has made it cheaper for banks to lend money.

It has also provided liquidity to the financial system and encouraged banks to lend to small businesses.

The PBOC's actions have so far helped to stabilize the financial system and prevent a deeper economic downturn.

But it remains to be seen whether they will be enough to stimulate economic growth and achieve the government's target of 5.5% growth this year.