China slashes interests to reheat cooling economy
22 Nov 2014 12:02 AM GMT
The People's Bank of China (PBOC), China's central bank cut the benchmark interest rate for one-year deposits by 25 basis points and the one-year lending rate by 40 basis points from Saturday.
This is the first adjustment to the benchmark rates since July 2012, official media here reported.
After the cut, one-year deposit rate will stand at 2.75 per cent, while one-year lending will be at 5.6 per cent, according to the central bank website.
The move comes as the economy is under pressure with GDP expanding by 7.3 per cent year on year in Q3, compared with 7.5 per cent in Q2 and 7.4 per cent in Q1. Q3 growth was the slowest quarterly growth since Q1 in 2009.
The PBOC also lifted the upper limit of the floating band of deposit rates to 1.2 times the benchmark from the existing 1.1 times announced in June 2012, a big step in interest rate reform. Until June 2012, China's commercial banks were generally not allowed to offer deposits rates higher than the benchmark.
'The Chinese ecoanomy is running within the proper range and positive signs have emerged in economic restructuring. However, high financing costs and financing difficulty still remain a prominent problem for the real economy,' the central bank said in a separate statement after announcing the interest rate cut.
'To reduce high financing costs for enterprises, small and micro-firms in particular, is of great importance to stabilising economic growth, job creation and the benefit of the people,' the statement said.
This is the first adjustment to the benchmark rates since July 2012, official media here reported.
After the cut, one-year deposit rate will stand at 2.75 per cent, while one-year lending will be at 5.6 per cent, according to the central bank website.
The move comes as the economy is under pressure with GDP expanding by 7.3 per cent year on year in Q3, compared with 7.5 per cent in Q2 and 7.4 per cent in Q1. Q3 growth was the slowest quarterly growth since Q1 in 2009.
The PBOC also lifted the upper limit of the floating band of deposit rates to 1.2 times the benchmark from the existing 1.1 times announced in June 2012, a big step in interest rate reform. Until June 2012, China's commercial banks were generally not allowed to offer deposits rates higher than the benchmark.
'The Chinese ecoanomy is running within the proper range and positive signs have emerged in economic restructuring. However, high financing costs and financing difficulty still remain a prominent problem for the real economy,' the central bank said in a separate statement after announcing the interest rate cut.
'To reduce high financing costs for enterprises, small and micro-firms in particular, is of great importance to stabilising economic growth, job creation and the benefit of the people,' the statement said.
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