China Brings Down Interest Rates Still Further

October 30, 2008 · By Kalyani Mukherjee Filed Under Economy Tagged as: China, Key rate cut

For the third time in six weeks, China’s central bank cut the benchmark deposit and lending rates bringing it down by a further 0.27% on Wednesday.

The People’s Bank of China announced on Wednesday that from now on one-year bank loans will cost 6.66% as compared to the earlier cost of 6.93% while the deposit rates too will fall from 3.87% to 3.60%. The website of China’s central bank also stated that the new rates will take effect from Thursday. There was no reason given for the latest round of cuts in the benchmark rates by the People’s Bank of China.

Before this China’s central bank had reduced its benchmark lending and deposit rates on two occasions – on September 15 as well as October 8. The second reduction in interest rates and reserve requirements by the People’s Bank of China had coincided with rate cuts by central banks of leading economies across the world.

The global credit crisis that gripped world markets recently led to coordinated attempts by several governments to shore up the global banking system. As part of this intervention major central banks announced reduction in benchmark lending rates in an attempt to pump in more liquidity into a financial system crippled by frozen credit lines.

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