China Cuts Interest Rates by 0.25 Percentage Points

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Last updated at: (Beijing Time) Thursday, February 21, 2002

China Cuts Interest Rates by 0.25 Percentage Points

The People's Bank of China (PBOC) announced in Beijing Wednesday that it has decided to lower the interest rates of deposits in Renminbi by an averaging 0.25 percentage points as of February 21. The PBOC spokesman said that the interest rate cut is a measure adopted by the central bank following sustained decrease of economic growth and consumer prices over the past few months.

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The People's Bank of China (PBOC) announced in Beijing Wednesday that it has decided to lower the interest rates of deposits in Renminbi by an averaging 0.25 percentage points as of February 21.

Decision aims to maintain healthy economy

A spokesman for the PBOC said that the central bank's decision aims to overcome the negative effects of the slowed growth of global economy on the development of China's economy, and maintain a sustained, fast and healthy development of the national economy.

The PBOC spokesman said that the interest rate cut is a measure adopted by the central bank following sustained decrease of economic growth and consumer prices over the past few months. The move will help cut corporate interest rate expenditure and lower their costs.

Deposit rate

According to the announcement, the annual interest rate of current deposit is lowered from 0.99 percent to 0.72 percent, while that of one-year fixed-term deposit is lowered from 2.25 percent to 1.98 percent.

Loan rate

At the same time, the annual interest rate of various loans is lowered by an average of 0.5 percentage points. The interest rates for deposited reserves by financial institutions in the central bank is lowered from 2.07 percent to 1.89 percent.

China to Liberalize Interest Rates in Next Three Years

China expects to free up interest rates system in about three years to speed up globalization of the world's largest developing economy, said Dai Xianglong, governor of the People's Bank of China, the country's central bank.

Dai made the remarks Wednesday at a news conference held by the Information Office of the State Council.

The Chinese government plans to loosen its grip on interest rates in a deliberate, gradual manner, beginning with lending rates, according to Dai. Full Story

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