BEIJING (Reuters) - China’s central bank, acting against a background of extreme stress in global financial markets, cut benchmark lending rates by 0.27 percentage point on Monday.
The cut lowers the cost of one-year bank loans to 7.20 percent.
Benchhmark deposit rates remain unchanged with the one-year rate at 4.14 percent.
The People’s Bank of China also cut the reserve requirement for all except the country’s five biggest banks and the Postal Savings Bank by 1 percentage point.
It is the first time that the central bank has lowered the proportion of deposits that lenders must hold in reserve since November 1999.
The cut in lending rates takes effect on September 16; the cut in reserve requirements goes into effect on September 25, the bank said on its website, www.pbc.gov.cn.
The PBOC said the aim of the easing was to maintain fast and stable economic growth.
Monday’s cut marked a partial reversal of a steady stream of increases in required reserves, which the PBOC raised on 18 occasions between July 2006 and June 2008 to mop up cash flooding into the banking system from China’s balance of payment surplus.
Reporting by Zhou Xin; Editing by Alan Wheatley