China's central bank cut its benchmark lending rate on Monday for the first time in nearly two years to prop up the slowing economy, in a sharp contrast to the United States and other major economies that are moving to tackle inflation.

In recent months, the U.S. Federal Reserve and the European Central Bank have been inclined to tighten their monetary policy in an attempt to curb steep inflation stemming partially from a spike in global material prices amid hopes for post-pandemic economic recovery.

But the latest rate reduction underscored that the government of President Xi Jinping is trying to prevent an economic downturn against the backdrop of an electricity shortfall, financial market turmoil and another wave of COVID-19 infections.

On Monday, the People's Bank of China said it lowered the one-year loan prime rate by 0.05 percent to 3.80 percent. It was the first rate cut since April 2020.

Earlier this month, the central bank also pledged to cut the amount of cash that banks must hold as reserves, in a bid to prompt financial institutions to lend more money to companies and other entities, a step that would bolster consumption and domestic investment.

The world's second-largest economy grew 4.9 percent from a year earlier during the July-September period, but the pace of expansion decelerated and the economic outlook has become gloomier.

In China, government regulations on energy consumption, as well as a hike in coal prices, have been forcing a number of factories to suspend their operations, undermining corporate performance among the nation's smaller firms.

Concern also remains that a potential bankruptcy of property developer China Evergrande Group could cause the resurgence of a global financial crisis comparable to the 2008 meltdown triggered by the collapse of U.S. securities company Lehman Brothers Holdings Inc.

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