China's central bank announced Sunday it would cut interest rates by 25 basis points as authorities seek to boost the flagging economy following a raft of data indicating a slowdown. The benchmark one-year lending rate would be reduced to 5.1% and the deposit rate to 2.25% from Monday, the People's Bank of China (PBoC) said on its website.
The move was widely predicted following subdued consumer inflation data and a fall in exports, according to analysts. The PBoC had already cut interest rates twice since November and this year has twice reduced the amount of cash banks must keep in reserve, as well as using other measures to inject liquidity into the market.
The bank said the latest cut was to reduce the cost of borrowing to continue to support the sustained and healthy development of the economy.
The economy was facing downward pressure while domestic prices remained low, providing space to cut rates, it said.
The bank has ruled out quantitative easing for an economic boost, anticipating on Friday it would use monetary policy to fine-tune the economy, the official Xinhua news agency reported.
GDP expanded 7.4% in 2014, the lowest rate in 24 years.
Concerns about the risk of deflation have also resurfaced with the release of data Saturday showing consumer inflation rose to 1.5% in April, below market forecasts. The figures come after January's slump in consumer inflation to 0.8%, the lowest since November 2009.