China cut its one-year benchmark lending rate on Monday, as expected, as authorities seek to ramp up efforts to stimulate credit demand, but surprised markets by keeping the five-year rate unchanged.

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The one-year loan prime rate (LPR) was lowered by 10 basis points to 3.45 per cent from 3.55 per cent previously, while the five-year LPR was left at 4.20 per cent.

In a Reuters poll of 35 market watchers, all participants predicted cuts to both rates.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. China cut both LPRs in June to boost the economy.