China cuts interest rates again to support economy

BEIJING (Reuters): China’s central bank cut its benchmark lending rates by 25 basis points to 4.85% on Saturday, the fourth reduction since November, as it gears up to lower borrowing costs and support a slowing economy.

The People’s Bank of China (PBOC) also reduced one-year benchmark deposit rates by 25 basis points to 2%, it said in a statement on its website, adding that the reductions would take effect on Sunday.

The PBOC last cut interest rates on 10 May, lowering one-year benchmark lending rates by 25 basis points to 5.1%, and lowering one-year benchmark deposit rates by 25 basis points, to 2.25%.

Weighed down by a property downturn, factory overcapacity and local debt, growth in China’s economy is expected to slow to a quarter-century low of around 7% this year. That is down from 7.4% in 2014, even with expected additional stimulus measures.

While more cuts had been expected as economic growth sputters, Saturday’s changes follow a plunge of 20% in China’s stock market in the last two weeks.