China cut interest rates unexpectedly on Friday, stepping up a campaign to prop up growth in the world’s second-largest economy as it heads towards its slowest growth in nearly a quarter century.
The cut — the first such move in over two years — came as factory growth has stalled and the property market, long a pillar of growth, has remained weak, dragging on broader activity and curbing demand for everything from furniture to cement and steel.
“It’s a surprise, another Friday night special," said Mark Williams, Chief Asia Economist with Capital Economics in London.
"It may not have a major impact on GDP growth — that depends on if policymakers also allow the rate of credit growth to pick up."
The People’s Bank of China said it was cutting one-year benchmark lending rates by 40 basis points to 5.6 per cent. It lowered one-year benchmark deposit rates by less — just 25 basis points. The changes take effect from Saturday.
The central bank also took a step to free up deposit rates, allowing banks to pay depositors 1.2 times the benchmark level, up from 1.1 times previously.