Beijing, Oct 24 (IANS) China’s central bank has cut interest rates for the sixth time in a year and reduced the reserve requirement ratio (RRR) for all banks, the media reported on Saturday.
The “double cut” on Friday, as Chinese financial media described the move, came four days after it was announced that GDP growth in the third quarter expanded by 6.9 percent, lower than the government’s annual target of 7 percent, the People’s Daily reported.
Also on Friday, Prime Minister Li Keqiang told 2,600 officials at the Central Party School that the government still has many policy weapons to maintain steady economic growth.
The People’s Bank of China – the central bank – lowered the one-year benchmark bank lending rate by 25 basis points to 4.35 percent and the benchmark rate for one-year bank deposits by the same margin to 1.5 percent, effective from Saturday.
The bank also cut the RRR by 50 basis points for all banks, taking it to 17.5 percent for the country’s biggest lenders.
Chinese financial information website Hexun online said the “double cut” can provide a maximum of 900 billion yuan ($140 billion) in additional liquidity to the Chinese investment market.
Buoyed by China’s decision, European shares moved higher and the Chinese offshore yuan rate fell against the US dollar, hitting a four-week low of 6.3958.
China market analysts said the “double cut” may help to stimulate economic growth in the last two months of the year.