Central bank announces rate cut to bolster real economy
Updated: 2015-08-25 18:13
The Chinese central bank has announced a fifth cut on interest rates since November of last year, along with lowering the requirement reserve ratio (RRR), as the country aims to revive the real economy.
The People's Bank of China (PBOC) said on its website that it will lower its benchmark one-year lending rate by 25 basis points to 4.6 percent from Wednesday. The benchmark deposit rate will be cut by the same amount to 1.75 percent.
The RRR, the minimum level of reserves banks must hold, will be lowered by 50 basis points.
The rate cut is intended to drive down financing costs to benefit small- and medium-sized enterprises and support the development of the real economy, according to the central bank.
In addition to five rate cuts since late November, the PBOC earlier removed its 75-percent loan-to-deposit ratio requirement to give banks more freedom to lend.
The cut came as the Purchasing Managers Index, a main gauge of manufacturing activities, fell to 47.1 in August, marking its lowest level since March 2009, according to a preliminary reading of the Caixin PMI.
The world's second-largest economy posted 7-percent growth year on year in the second quarter, unchanged from the first quarter and its lowest quarterly growth rate since 2009.