china lifts interest rate cap in drive to stimulate economy
Last Updated : GMT 04:32:38
Arab Today, arab today
Arab Today, arab today

China lifts interest rate cap in drive to stimulate economy

Arab Today, arab today

Arab Today, arab today China lifts interest rate cap in drive to stimulate economy

China's central bank cuts its benchmark interest rates
Beijing - AFP

China on Friday abolished its official cap on interest rates for savers and announced a further easing in monetary policy as it seeks to address slowing growth in the world's second-largest economy.

The end of the rate cap, announced by the central People's Bank of China, will allow financial institutions to offer savers a market-based rate of return for their money, introducing true competition for capital in a still state-dominated economy.

The decision will bring significantly more competition to the financial sector, which in recent years has seen property and share prices boom, only to face heightened risks when the bubbles burst.

The policy will "allow greater leeway for market forces to influence bank loan and deposit rates and the Chinese financial system generally," Bill Adams, senior international economist at PNC Financial Services Group, said in a research note.

The move comes days before the leaders of the ruling Communist party meet to set the direction for the economy in the next Five Year Plan. and as Beijing seeks a greater international role for the yuan, including joining the exclusive ranks of the International Monetary Fund's special drawing rights reserve currency.

The move was accompanied by a 0.25 percentage point cut in interest rates and a 0.50 percentage point drop in the reserve requirement ratio, the amount of cash banks must keep in reserve.

Stocks markets surged on news of the rate cut, which comes on the heels of hints from the European Central Bank that fresh stimulus measures in the euro area could be expected after its December meeting.

 

- 'Serious about growth' -

"It looks like the whole monetary easing is heading into another round," Christian Gattiker, head of research at Julius Baer Group Ltd in Zurich, told Bloomberg News.

"China was very reluctant to move, but they have moved today and that's taken as a proxy for assessing whether China is serious about supporting growth."

ForexTime analyst Lukman Otunuga said in a note that the move showed how China's central bank "is willing to do all it can to ensure that the 7 percent end of year growth target is reached."

China's expanded monetary easing has fuelled hopes that it will be followed by similar moves from other key central banks, including Japan and the United States, as policymakers try to boost slowing global growth.

"The rate cut and reserve cut are earlier than the market had expected. The government is not taking any time off to keep easing monetary policy," Zheshang securities analyst Zhang Yanbing told AFP.

"This will help lower social financing costs, boost the property market and give a lift to the already-rising financial market."

The Chinese central bank announced similar tandem cuts in August when the economy was battling a collapse in share prices.

The PBoC has now cut benchmark interest rates six times since November as authorities try to head off a sharp deceleration of the economy, which saw growth in the third quarter slip to 6.9 percent, the lowest level since 2009.

Reducing the reserve requirement ratio is also a stimulatory measure as it increases the amount of money banks can lend out, so it can boost economic activity.

The People's Republic, founded when Mao Zedong's forces won the Chinese civil war in 1949, first began to embrace capitalism in the late 1970s under Deng Xiaoping, but has only recently vowed to give market forces the 'decisive role' in the economy.

-- Bloomberg News contributed to this story --

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

china lifts interest rate cap in drive to stimulate economy china lifts interest rate cap in drive to stimulate economy

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

china lifts interest rate cap in drive to stimulate economy china lifts interest rate cap in drive to stimulate economy

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Prince's vision spurs new Cornwall village

GMT 03:12 2017 Saturday ,18 November

Prince's vision spurs new Cornwall village
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Israel ready to cooperate with Saudi

GMT 06:31 2017 Friday ,17 November

Israel ready to cooperate with Saudi
Arab Today, arab today Airbnb raided by Japan

GMT 01:55 2017 Saturday ,18 November

Airbnb raided by Japan
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Tesla unveils its all-electric semi truck

GMT 02:59 2017 Saturday ,18 November

Tesla unveils its all-electric semi truck
Arab Today, arab today Baidu speeds up AI progress

GMT 11:46 2017 Friday ,17 November

Baidu speeds up AI progress
Arab Today, arab today Ayten Amer happy for “The Flood” success

GMT 08:06 2017 Wednesday ,15 November

Ayten Amer happy for “The Flood” success
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 08:21 2017 Tuesday ,14 November

Nelly Karim focuses on humanitarian roles

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 06:13 2017 Friday ,17 November

Pope denounces healthcare inequality

GMT 05:18 2017 Thursday ,16 November

Boeing announces $27bn from flydubai

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday