PBC said it was cutting the one-year benchmark bank lending rate by 25 basis points to 4.6 per cent
China's central bank cut interest rates and lowered the amount of reserves banks must hold for the second time in two months on Tuesday.
Shanghai/Beijing: China’s central bank cut interest rates and lowered the amount of reserves banks must hold for the second time in two months on Tuesday, ratcheting up support for a stuttering economy and a plunging stock market that has sent shockwaves around the globe.
The moves came after Chinese stocks tumbled again on Tuesday, as investors despaired at the lack of policy action from Beijing in response to recent data suggesting the downturn in the world's second-largest economy was deepening.
The People's Bank of China (PBC) said it was cutting the one-year benchmark bank lending rate by 25 basis points to 4.6 per cent, cutting one-year benchmark deposit rates by the same amount, and red-ucing reserve requirements by 0.5 per cent to 18 percent for most big banks.
Major Chinese stock indexes nosedived more than seven per cent on Tuesday, hitting their lowest levels since December, following a more than eight per cent plunge on Monday.
The slump had resumed last week despite Beijing’s efforts to arrest a 30 per cent crash earlier in the summer with hundreds of billions of dollars of state-backed share purchases.
This time, the government appeared to be sitting on its hands until Tuesday’s response, which aimed more at shoring up economic fundamentals than underpinning stocks. Following the PBC’s rate cut, European markets recovered almost all their losses from Monday, while US stocks rebounded sharply as investors sought out bargains.
( Source : agencies )
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