China cuts key lending rate to 6 per cent to spur growth
05 Jul 2012
China's central bank today announced a 0.31 percentage point reduction in the key one-year yuan lending rate, in a bid to shore up the economy that has started showing signs of weakness.
The People's Bank of China (PBC) today announced a reduction in its benchmark lending rate to 6.0 per cent, from 6.31 per cent, and a simultaneous reduction in deposit rate to 3 per cent from 3.25 per cent.
The rate cuts, which would be effective tomorrow, come close on the heels of the reduction in lending rates announced on 7 June 2012.
In addition, PBC also allowed banks to lend at 70 per cent of the benchmark rate, down from 80 per cent of the rate allowed at present.
Along with the easing of monetary policy, the People's Bank of China is also in the process of liberalising the country's banking system.
Banks can now compete on the interest rates they offer customers, although within a prescribed limit.
