FXStreet (Córdoba) – The People’s Bank of China cut interest rates on Saturday and also lowered the amount of reserves certain banks are required to hold (RRR) in and attempt to underpin the economy.
PBoC cut the one-year benchmark lending rate cut by 25 bps to 4.85% and one-year benchmark deposit rate cut by 25 bps to 2.0%. It also cut the reserve requirement ratio (RRR) for banks lending to farm sector and small and medium size enterprises (SMEs) by 50 bps.
“The interest rate and RRR cuts, will help stabilise growth, adjust structures and lower social financing costs”, the central bank said. The central bank will “continue to implement prudent monetary policy, use various policy tools to strengthen and improve marco-prudential management, optimise policy combinations and create neutral and appropriate monetary and financial environments for economic adjustments and upgrading.”
The policy move came a day after Chinese stocks saw their biggest one-day fall in several years. On Friday, the Shanghai Composite Index fell 7.4% accumulating a nearly 20% loss over the last two weeks.
(Market News Provided by FXstreet)