China lowered its main loan interest rates by 10 basis points on Tuesday as Beijing stepped up efforts to boost its economy as trade tensions threaten derailed growth.

The People's Bank of China lowered its 1-year loan advantage from 3.1% to 3.0%, while the 5-year LPR dropped from 3.6% to 3.5%.

This marks the first drop since central banks cut 25 base points in October, as Beijing intensifies efforts to improve the economy.

The benchmark loan interest rate (usually charged to the bank's best customers) is calculated based on the proposed rate submitted to the PBOC by the designated commercial bank.

A 1-year LPR affects corporate and most household loans in China, while a 5-year LPR is the benchmark for mortgage interest rates.

The tax cuts were as a large number of state-backed commercial lenders lowered their deposit rates to lower 25 basis points to protect their net interest margins, paving the way for ways to reduce key loan rates.

The tax cuts were part of a series of stimulus measures announced earlier this month, including lowering loan interest rates and the amount of cash banks must hold. The mortgage loan interest rate under the national housing provident fund and government-backed housing lenders have also been reduced by 25 basis points.

China's offshore elements have escaped some depreciation pressure to remain relatively stable, with the last deal at $7.2178, after weakening to a record 7.4287 last month.

Concerns about the trade war led to lower expropriation between the world’s two largest economies following a meeting of trade representatives held in Switzerland earlier this month. Beijing and Washington agreed to refund most tariffs for 90 days, giving some further negotiations room for a longer deal.

This prompted a large number of global investment banks to raise their forecasts for China's economic growth this year, while expectations for more positive stimulus were expected as Beijing strives to reach its growth target of about 5%.

Nomura's 3.7% behind April's resilient economic data boosted China's forecast for quarterly GDP growth, while increasing its full-year growth forecast from 3.5% to 3.7%.

Despite the recent upside, banks warn that the possibility of us raising tariffs again due to the long housing recession is “high risk of a double blow to the economy”.

Chinese authorities have set their ambitious growth target at "about 5%" this year.

Wholesale prices fell the most in the six months in April, while consumers' prices fell by the third moth, highlighting the ongoing deflationary pressure in the economy. While the economy is working to curtail deflation, economists generally expect Beijing to push out other stimulus in a staggered way and slower manner.

An economist at Morgan Stanley said in a report Monday that other stimulus measures could be "lighter, delayed."

According to investment banks estimates, despite tariff probation, the U.S. trade-weighted tax rate on China has risen by 40%, far higher than the 11% tax on Trump’s return to the office.

"Inflation may linger in view of the continued increase in tariffs and reactive policies," Morgan Stanley added. As higher tariffs will eventually weaken external demand after the recent preload activity for exports gradually fades, exacerbating domestic excess capacity issues.