People’s Bank cuts interest rates and reserve ratio
October 26, 2015 Category Finance, Weekly
China’s central bank cut interest rates on October 24 for the sixth time in a year and reduced the reserve requirement ratio (RRR) for all banks. The People’s Bank of China (PBOC) lowered the one-year benchmark bank lending rate by 25 basis points to 4.35% and the benchmark rate for one-year bank deposits by the same margin to 1.5%. The bank also cut the RRR by 50 basis points for all banks, taking it to 17.5% for the country’s biggest lenders. The “double cut” can provide a maximum of CNY900 billion in additional liquidity to the Chinese investment market. As a result of the announcement the Chinese offshore yuan rate fell against the U.S. 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. Mark Williams, Chief Asia Economist at Capital Economics, said China will probably cut its benchmark interest rates and the RRR once more before the end of the year to further stimulate growth, the China Daily reports.
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