China Monetary Policy


People's Bank of China lowers interest rates for second consecutive month

On 5 July, the People's Bank of China (PBOC) cut interest rates in a decision that again caught markets off guard, after the Central Bank had already reduced interest rates by surprise on 7 June. Authorities seek to bolster bank lending to shore up the Chinese economy and avoid a harsh slowdown. The PBOC announced an asymmetric interest rate cut, lowering the 1-year lending rate by 31 basis points to 6.00% and the 1-year deposit rate by 0.25 basis points to 3.00%. Simultaneously, the PBOC increased the discount that commercial banks can offer on the benchmark lending rate to 30%, up from the previous 20%.

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China Monetary Policy Chart

China Monetary Policy July 2012

Note: 1-year lending rate, 1-year deposit rate and reserve requirement ratio (RRR) for large banks in %.
Source: People

China Economic News

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