China lowers interest rates for the second time in three months

PUBLISHED ON MAR 1, 2015 10:05 AM

BEIJING (BLOOMBERG) - China's central bank cut benchmark interest rates for the second time in three months as disinflation gives room to step up support for the nation's slowing economy.

The one-year deposit rate will be lowered by 25 basis points to 2.5 per cent and the one-year lending rate will also drop by a quarter percentage point to 5.35 per cent on March 1, the Beijing-based People's Bank of China (PBOC) said on its website late Saturday.

The move reflects deepening concern over an economy squeezed by a property slump, tighter controls over local government debt and rising capital outflows. By adding rate cuts to a reduction in the cash banks must set aside as reserves, the PBOC is intensifying its easing measures along with more than a dozen global counterparts this year as plunging commodity prices provide scope to support growth.

"A rate cut was urgently needed," said Wang Tao, the chief China economist at UBS Group AG in Hong Kong, who predicted one or two more reductions this year.