China's Surprise Rate Cut |
| Businessweek - Jul 5, 2012 |
Just one week before China’s second-quarter GDP number is to be released, the People’s Bank of China has cut interest rates again, the second time in less than a month. The surprise move signals that policy makers are worried about the prospect of a hard landing for the world’s second-largest economy, as growth continues to decelerate and two recent surveys show manufacturing growth slowed in June. First-quarter growth was 8.1 percent, the slowest rate in almost three years. Earlier, investment banks had already lowered their estimates for second-quarter growth, with Bank of America expecting 7.5 percent and Crédit Agricole Corporate & Investment Bank as low as 7 percent.
The central bank will reduce the one-year benchmark savings rate by 25 basis points, to 3.00 percent, to take effect July 6, according to an announcement on the PBOC website. And it will cut the one-year lending rate by 31 basis points, bringing it to 6.00 percent. The move follows an earlier interest rate cut on June 7, the first since 2008, and three reductions in bank reserve requirements, since last November.
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- Posted: 2012-07-05 13:14:17
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