China Cuts Rates

The People's Bank of China cut its benchmark one-year lending rate by 25bps to 4.6 percent on August 25th, 2015. Policymakers also decided to lower reserve requirements for banks.

The one-year deposit rate was also lowered by 25bps to 1.75 percent, effective from Wednesday August 26th. The reserve requirement ratio for all commercial banks was cut by 50bps with effect from September 6th.

It is the fifth rate cut since November last year, bringing the benchmark rate down by 140 bps to a fresh record low.

The decision comes after the Shanghai Composite Index fell for the fourth straight session on August 25th, closing down 7.6 percent at the lowest since December last year. Yet, the move was not a complete surprise to markets as policymakers devalued the Yuan nearly 2 percent against the USD earlier on August and most recent data for exports and manufacturing disappointed, adding greater fears about the country’s economic slowdown. 

The government targets 2015 growth at 7 percent. 

China Cuts Rates

Joana Taborda |
8/25/2015 12:12:54 PM