China Cuts 1-Year Lending Rate by 0.25 Points; First Time Since 2008
Tweet Send to a Friend
In an effort to support more growth for the country, China's central bank announced a rare rate cut Thursday.
According to the People's Bank of China, the benchmark one-year lending rate will drop by 0.25 points and will be effective starting Friday. The lending rate drops from 6.56 percent to 6.31 percent, while the one-year deposit rate moves from 3.50 percent to 3.25 percent.
Banks will also be able to offer a 20 percent discount on lending, which is wider than the previous allowance of 10 percent.
This is the first time since 2008 China trimmed rates. The move was made to combat worries the debt crisis in Europe might have a broader impact in the coming months.
Other than the rate cut, the People's Bank also trimmed reserve requirements at least three times over the last several months; once last November, then February and most recently in May. The moves followed the slowest manufacturing expansion in six-months through May.
Investors are likely to keep an eye on iShares FTSE China 25 Index Fund (NYSE: FXI), iShares MSCI Emerging Markets Index (NYSE: EEM), as well as iShares MSCI South Korea Index (NYSE: EWY) and iShares MSCI Japan Index (NYSE: EWJ), amongst others.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
According to the People's Bank of China, the benchmark one-year lending rate will drop by 0.25 points and will be effective starting Friday. The lending rate drops from 6.56 percent to 6.31 percent, while the one-year deposit rate moves from 3.50 percent to 3.25 percent.
Banks will also be able to offer a 20 percent discount on lending, which is wider than the previous allowance of 10 percent.
This is the first time since 2008 China trimmed rates. The move was made to combat worries the debt crisis in Europe might have a broader impact in the coming months.
Other than the rate cut, the People's Bank also trimmed reserve requirements at least three times over the last several months; once last November, then February and most recently in May. The moves followed the slowest manufacturing expansion in six-months through May.
Investors are likely to keep an eye on iShares FTSE China 25 Index Fund (NYSE: FXI), iShares MSCI Emerging Markets Index (NYSE: EEM), as well as iShares MSCI South Korea Index (NYSE: EWY) and iShares MSCI Japan Index (NYSE: EWJ), amongst others.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
You May Also Be Interested In
- Weekly Natural Gas Inventory Grows 89 bcf vs. 92 bcf Gain Expected
- Japan to Stem Bond Volatility as Aggressive Fiscal Policy Takes Hold (FXY) (EWJ)
- Crude Inventory Drops 338K Barrels vs 1M Barrel Decline Expected
Create E-mail Alert Related Categories
Economic Data
Login with Facebook
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
