The People’s Bank of China decided to cut the interest rates. It is the 21st bank among regulators, which started the monetary policy easing this year. Thus, the PBOC’ step proves the economic slowdown.
The decision came into force on March 1. The cut is applied to deposit and lending rate. The deposit rate will be lowered to 2.5% from 2.75% and lending rate will be cut to 5.35% from 5.6%. The PBOC also made a decision to raise the upper ceiling on the benchmark deposit rate from 120% to 130%.
The PBOC reported on its decision ahead of the China's annual legislative meetings opening on Thursday. During the meeting the key policies are debated and official targets are revealed. In 2014 the economic growth amounted to 7.4% that was below the targeted score of 7.5%. The GDP growth in 2014 was the lowest for the last 25 years.
The PBOC lowered benchmark rates for the second time in four months. The latest monetary policy easing took place in November last year. However, according to experts, it had an insignificant impact on the economy. Nevertheless, the interest rates cut should have helped the economy to adjust to new development rates, dynamic, and prices on the labor market. It also was emphasized that the Chinese economic is developing according a new standard.
It is supposed that China’s stock market will proceed with its increase. The national currency will go on falling against the US dollar, trying to support the real estate market.
