The People's Bank of China trimmed its benchmark lending rate for the fifth time since November and decreased the amount of cash lenders must set aside, thus increasing efforts to stabilize a stock market rout and deepening economic slowdown, Bloomberg has reported.
The one-year lending rate will drop by 25 basis points to 4.6 percent effective Wednesday, the country's central bank said on its website Tuesday. The one-year deposit rate will get down by 25 basis points to 1.75 percent.
The acceleration of monetary easing highlights policy makers’ determination to meet Premier Li Keqiang’s 2015 growth target of about 7 percent.
The stimulus was implemented due to the growing risk of capital outflows and tighter liquidity after China devalued its national currency on August 11 and due to weaker-than-expected economic data, as well as stock market weakness.
Earlier this year, PBoC's Governor Zhou Xiaochuan had already lowered the required reserve ratio twice, with an additional move targeted to certain lenders. Policy makers are also acting to incentivize lending and are expanding lending capacity at the country’s policy banks.
