Policymakers in China trimmed a key benchmark lending rate for the first time in more than three years amid a protracted slowdown in the world’s second-biggest economy, prompting local stocks to nudge higher and bond yields to fall.

The People’s Bank of China, the country’s central bank, said in a statement on Tuesday that it was lowering the interest for the one-year medium-term lending facility by five basis points to 3.25 per cent, the first time it has cut since early 2016. It did not provide a reason for cutting the MLF.

The MLF is the benchmark against which the PBoC lends to China’s commercial banks. A separate rate, known as the loan prime rate, was introduced in August to make lending rates more market-driven. It is set on the 20th of every month. China’s primary interest rate, the one-year benchmark, has remained unchanged since 2015.