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China's Central Bank Cuts Interest Rates In Growth Move
BBC NEWS, BUSINESS
July 5, 2012: The Chinese central bank has cut its benchmark interest rates for the second time in two months, in a bid to arrest slowing economic growth. Benchmark lending rates will be cut from 6.31% to 6%, while deposit rates will fall from 3.25% to 3%. The rate cuts will come into force on Friday and closely follow on from the last cuts made on 7 June.
Before these moves, the People's Bank of China had not cut interest rates since 2008. Commenting on the move, Rupert Armitage, director at Shore Capital, said: "China are cutting rates because they're experiencing a slowdown. "Everybody's been concerned about the economy, but now they're actually doing something about it."
The central bank's rate cuts come on the back of a gradual liberalization of China's banking system. Banks can now compete on the interest rates they offer customers, within a stipulated range.
China's export growth has been hit by a fall in demand from two of its biggest markets, the US and Europe, still struggling with the global debt crisis.
China's economy grew at an annual rate of 8.1% in the first quarter, the slowest pace in almost three years. It hopes lower interest rates will help boost domestic demand.
