China Cuts Interest Rates By Quarter Of A Percentage Point

China’s economy faced a bleak outlook amid mixed data released on Monday – slightly better than expected growth but disappointing investment and output figures – fuelling calls for more intensive policy support to boost economic activity.

“There’s an argument that interest rates and monetary policy in China have been too tight”.

China’s economy is showing no signs of growth but the government is trying to add stimulus to prop up the scenario.

The PBOC said on its website that it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.35 per cent, effective from October 24.

“What might be missed by the headline reads is that the PBoC has abolished the deposit rate ceiling – this is a big step forward in liberalising the interest rate market and shows China is very much committed to its goals of liberating the financial system”, he said.

The country’s central bank on Friday announced cuts in benchmark interest rates on loans and deposits. He also said China’s central bank will adjust repo rates using open market operations, and will influence other rates through the Shanghai Interbank Offered Rate and bonds. Likewise, the weight of final consumption on GDP has also registered a positive evolution in the last five years, contributing to about half of economic recent growth and representing 51 per cent of GDP.

China has never said the economy must grow seven percent this year, Premier Li Keqiang said in comments reported by the government ahead of a key meeting this week that will set economic and social targets for the next five years.

The People’s Bank of China headquarters in Beijng.

On August. 11, China’s central bank unexpectedly allowed the yuan to trade more freely.

While this was slightly higher than economists’ forecasts, it represents the slowest expansion since 2009 and keeps China on track to expand at its slowest pace in a quarter of a century this year.

The Russian ruble was also up as emerging markets’ stocks continued their four-week rise partially due to end to speculation the US Federal Reserve would raise interest rates before the end of the year, and largely on and end to fears of a “Chinese meltdown”.

He explained that China didn’t have extremely high debt levels, and the general approach is always to stabilise power levels while the lender wasn’t exceedingly troubled about reducing the level of leverage in the economy.

The Chinese economy has become beset by weak demand and excessive industrial capacity – both core factors behind the collapse in the price of commodities globally – including oil and steel.