July 5 (MarketWatch) — China’s central bank on Thursday unveiled a surprise interest rate cut, lowering borrowing and deposit rates while also enabling banks greater leeway in setting their own lending rates at a discount to the benchmark.
The People’s Bank of China lowered its one-year yuan deposit rate 25 basis points, or a quarter percentage point, to 3% and its one-year lending rate by 31 basis points to 6%, according to a statement posted on its website.
The central bank also announced more relaxed rules on lending for commercial bans, allowing lending rates to be set as low as 70% of the benchmark rate, down from 80% currently.
The move, the second rate cut in a month, was seen as part of efforts to prop up lending after data showed credit growth in an apparent stall in June. It also comes on a day when the European Central Bank cut interest rates by a quarter-point and the Bank of England extended an asset purchase program by 50 billion pounds.
JK Comment: Here we go again…that’s two out of three of the world’s largest economies that are easing/providing stimulus.