China’s central bank announced today it will cut interest rates on loans and deposits beginning Tuesday to try to stimulate a sluggish economy.
The reduction, said by a People’s Bank of China spokesman to average 1.08 percentage points, was the second drop in the cost of borrowing this year. Rates fell by an average of 1.26 percentage points in March.
“The reduction of interest rates will help reduce the burden on enterprises, reduce costs and stimulate the market,” the official New China News Agency quoted the spokesman as saying.
Actual rates were not published. Economists said they ranged widely, from about 7% for short-term deposits up to about 10%. Loans are generally slightly cheaper.
The economy is showing “a favorable trend” but markets are slack, stockpiles of unsold products are large and industrial efficiency is still low, the spokesman said.