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China cuts interest rate once again

24 Oct '15
2 min read

China has cut its one-year benchmark interest rate by 0.25 percentage points to 4.35 per cent. The Chinese central bank cut interest rates for the sixth time in less than a year. It also cut the ratio of Chinese currency that it expects its banks to hold, according to media reports.

China hopes that looser monetary policy, in the shape of cheaper money, will help it hit its growth target of 7 per cent for 2015.

The decision from the People's Bank of China suggests a concern that the slowdown in growth might be becoming too abrupt. Official figures published earlier this week told a different story. They suggested a very moderate weakening in the third quarter of the year. But Beijing's data are widely regarded as unreliable. China's 3rd quarter GDP grew at 6.9 per cent, the slowest since 2009.

By making loans cheaper, China is hoping to encourage companies to spend and invest and contain the slowdown. But the country runs the risk of the move leading to a ballooning of debt.

China's economy has grown at an average annual rate of 10 per cent for the past three decades, but has been cooling in the past few years. (SH)

 

Fibre2Fashion News Desk – India

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