The central bank of China cuts interest rates and reserve requirement ratio for banks
China’s central bank late on October 23, 2015 cut both interest rates and the reserve-requirement ratio for banks, in a bid to revive slowing economic growth
The central bank also scrapped its cap on deposit rates for China’s commercial lenders and rural cooperatives, a key move toward the government’s long-promised interest-rate liberalization.
The People’s Bank of China said in a statement that it will cut its benchmark lending and deposit rate by 0.25 percentage point. After the cuts, China’s benchmark one-year lending rate will be 4.35 %, down from 4.6 %, and the one-year deposit rate will be 1.5 %, lowered from 1.75 %, effective as of October 24, 2015.
This is the sixth cut in benchmark interest rates since November last year.
Meanwhile, the PBOC said it would also lower its reserve-requirement ratio for banks by 0.5 percentage point, also effective October 24, 2015, in a bid to boost liquidity and maintain stable credit growth. The official reserve-requirement ratio for most large banks will fall to 17.5 % after the cut takes effect.
The central bank said there would be an extra 0.5 percentage point cut in certain banks’ reserve-requirement ratio, in a bid to support the country’s small businesses and agricultural sector.
This is the fourth across-the-board reserve-requirement-ratio reduction so far this year.