China Cuts Key Rates. It Could Just Be the Start for Stimulus.

China’s benchmark lending rates were cut on Tuesday as the country looks to encourage domestic demand in the face of U.S. trade tensions. There could be more stimulus to come.

The one-year loan prime rate was lowered to 3.0% and the five-year rate was reduced to 3.5%, the People’s Bank of China said Tuesday, citing a result of biddings by the nation’s major banks. Both reductions were by 10 basis points.

“Weaker-than-expected retail sales and home prices just released have likely increased the sense of urgency for stimulus measures, especially for consumption," wrote Richard Tang, an analyst at Julius Baer. "This should catalyze another rally later this year, in our view, after the first trading window in February and March.”