China's cuts interest rates to reduce cost of borrowing and boost the economy

Monday, May 11th 2015 - 10:08 UTC

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The benchmark one-year lending rate is reduced to 5.1% and the deposit rate to 2.25% from Monday, the People's Bank of China (PBoC) said on its website.

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.

Categories: Economy, International.

Tags: China economy, China inflation, China's cuts interest rates, People's Bank of China.

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yankeeboy
They can't use “monetary” policy to get them out of this mess. The problem is structural and will not be solved.
They will never make it into a developed nation.
May 11th, 2015 - 11:21 am 0
JoseAngeldeMonterrey
China´s moving towards economic stagnation. China has already pumped hundreds of billions into the economy in the past years, but only overheated its economy without adding much growth. The good old days of double digit growth are over, demographic aging is beginning to hurt internally, free trade agreement proliferation around the world means less import duties for those nations and greater opportunities to compete against Chinese products, transportation costs, piracy, pollution and other problems are not challenging China´s growth story.
May 11th, 2015 - 05:56 pm 0
ChrisR
@ 2 I think we get the gist of your post even with the error sis words from the end.

It seems the good days are gone and the peasants are waking up and continue to ask for more money.

Who can blame them when those in charge have raped the country more than TMBOA, DumbAss Dilma and the Chief Crook, Lula.
May 11th, 2015 - 07:50 pm 0

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