Hong Kong (CNN Business) China's central bank is further loosening its purse strings as the country grapples with a slumping economy and a prolonged trade war with the United States.

On Wednesday, the People's Bank of China cut its new benchmark lending rates by five basis points. The one-year loan prime rate (LPR) dropped to 4.15% from 4.20% in October. The five-year LPR was cut for the first time since it was introduced a few months earlier, going from 4.85% to 4.8%. The cuts are relatively small, and analysts say further reductions could come as China tries to boost the economy while reining in inflation.

The LPR, which banks charge corporate clients for new loans, is a new lending benchmark that China introduced in August and hopes will gradually replace the existing fixed benchmark lending rate.

"It's now very evident that Beijing has been stepping up efforts to stabilize growth as top leaders are increasingly concerned," said Ting Lu, chief China economist for Nomura, in a recent research report.

The rate cut did not appear to cheer investors in the region, who are increasingly concerned instead about whether the United States and China can reach a comprehensive phase one trade deal.