SHANGHAI (Reuters – China expects to reduce its benchmark lending rate at its monthly fixing Friday. It is doing so to support credit demand and cushion an economic slowdown caused COVID-19 disruptions.

LPR is the loan prime rate that banks charge their most valuable clients. It’s set every month on the 20th of the month when 18 commercial banks submit rates to the People’s Bank of China.

Sixteen traders and analysts, representing 64% of the 28 respondents to the Reuters snap survey, predicted a drop in the one-year Loan Primrate Rate (LPR), or in the five year tenor.

Twelve respondents predicted a slight cut of five basis points for both tenors.

The LPR of the 10 remaining participants will not change for the fourth month. It is consistent with steady borrowing costs from the central bank’s medium-term loans facility (MLF loans), which are now used as a guideline to the lending benchmark.

The one-year LPR currently at 3.7% is the basis of most outstanding and new loans to China. Pricing of mortgages is affected by the current five-year LPR, which stands at 4.60%.

Tommy Xie from OCBC Bank, who heads Greater China Research said that China will likely provide more support in future sessions.

He stated that PBOC had kept the MLF rate at a constant level in May. However, China is expected to reduce its LPR fixation this week because of falling bank funding costs.

An assortment of data, including retail sales and credit lending, showed that COVID-related strict measures and mobility restrictions had taken a severe toll on the economy.

The new lending by banks to the market fell to its lowest level in 4 1/2 years, and forecasts for the future were not met.

Numerous senior officials pledged recently to increase the number of stimulus measures that will be implemented to boost the economy. According to state media, Premier Li Keqiang stated Wednesday that China had policy flexibility in addressing challenges as China faces downward pressure.