China move to cut interest rates

The key interest rates in China have fallen to 6.66 percent from 6.93 percent as the People’s Bank of China have decided to cut interest rates for the third time in two months in order to steer the country away from the deepening global financial crisis.

The deposit rate has also fallen to 3.60 percent from 3.87 percent, although interest on current accounts will remain unchanged at 0.72 percent, amid fears that the Chinese economy is facing a serious slowdown.

A combination of a slump in the property market and a reduction in export demand has resulted in the slowest quarter growth in over five years.

In order to help deal with the situation the government has taken action by raising export-tax rebates and cut costs for purchasing homes.

Infrastructure work has been planned in order to create more jobs and stir the construction industry into action.

With inflationary fears rife in East Asia, the central bank has moved to stall the Yuan against the dollar by reducing the limit between interbank lending.

Monetary policy has still been kept tight in order to fight inflation although the focus has firmly shifted away from fighting off inflation towards sustaining growth.

Story link: China move to cut interest rates