The People’s Bank of China announced its decision to cut the key interest rate and improve the stimulating program. It was planned to change the rate on October 24.
The regulator lowered the benchmark bank lending rate and one-year benchmark deposit rate by 25 basis points to 4.35% and 1.50% respectively. Besides, reserve requirements for all banks were lowered by 50 basis points. Moreover, the PBOC scrapped a deposit-rate ceiling that limited the rate banks could pay savers.
Analysts explain that the PBOC’s decision corresponds to the policy of the Chinese government intended to achieve economic growth of 7% this year.
The world’s markets showed a significant rise amid the PBOC’s announcement. Thus, S&P 500 moved up by 20 points and FTSE 100 climbed by 1.74% in London. Miners Glencore and Fresnillo added 9% and 5% respectively becoming leaders among corporate stocks.
According to Zerohedge, the PBOC’s actions raised the possibility of the Fed’s key interest rate hike in December. Besides, the ECB’s intention to expand the quantitative easing program and China’s policy might diminish Janet Yellen’s concerns regarding the US economic growth.
