China lowered its lending benchmark rate on Wednesday, just a day after the People's Bank of China (PBOC) governor Yi Gang said Beijing would step up credit support and lower real lending rates support to real economy. 

The one-year LPR, a rate set by the central bank based on quotes from a panel of banks, fell five basis points to 4.15 percent from 4.20 percent in October. The five-year LPR was lowered by the same margin to 4.80 percent from 4.85 percent.

Wednesday's pruning of the loan prime rate (LPR) followed China's first cut in a short-term market rate in four years on Monday, suggesting the start of "a new easing cycle", Reuters cited Ji Tianhe, China head of foreign exchange and local markets strategy at BNP Paribas in Beijing, who says there is room for rates to go lower.

On Tuesday, Yi also urged giving full play to the role of the LPR mechanism in bringing down real loan interest rates as well as continued efforts in improving banks' lending capacities by replenishing capital.

China will continue to implement a prudent monetary policy and see banks contribute more to financing the real economy, according to the statement released at the Tuesday PBOC meeting.

Read more: China's central bank urges financial sector to serve real economy