China’s central bank yesterday cut its benchmark interest rates and the amount of cash banks must keep on hand, the latest stimulus aimed at boosting the world’s second-largest economy as it battles a collapse in share prices.
The People’s Bank of China announced on its Web site that it was reducing lending and deposit interest rates by 0.25 of a percentage point each and its reserve requirement ratio by 0.5 percentage points. The moves are to take effect today, it said, and follow similar tandem cuts in late June.
China’s “economic growth rate remains under pressure,” the central bank said in a statement, adding that the cuts were meant in part to “support the real economy to continue to develop healthily.”
It has now cut benchmark interest rates five times since November last year as authorities try to head off a too sharp deceleration in economic growth.
The lending rate was cut to 4.6 percent while the deposit rate was reduced to 1.75 percent, the bank said.
Reducing the reserve requirement ratio is also a stimulatory measure as it increases the amount of money banks can lend, so can boost economic activity.
China’s plunging share markets and rising concerns overseas about its growth outlook have spurred a global rout in equity markets amid concerns the world economy could suffer if China’s weakens too precipitously.
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