The decline in benchmark rates on deposits and loans in a year, respectively 0.25 and 0.40 percentage point, will be effective from Saturday, said the People’s Bank of China (PBOC, bank Central) on its website.
This is the first decline in interest rates in China since June 2012.
Decided in response to slower growth and deflationary risks, the extent will the deposit rate at one year reduced to 2.75% and the return on savings to 5.6%, according to the central bank.
The measure electrified world stock markets, already arranged after the European Central Bank had announced readiness to extend support to the economy if it became necessary.
The main European indices ended up widely (Paris + 2.67%, Frankfurt + 2.62% + 1.08% London, Milan + 3.88%) were significantly higher in Wall Street and moving towards 1700 GMT (Dow Jones 0.64%).
The decision of China “highlights authorities’ concerns about the economy.” “This is another strong because Beijing has always opposed intervention on rates to prevent a bubble signal” Real commented one analyst Andrea Tueni Saxo Bank.
On Wall Street, the indices New York’s “move towards new highs in closing,” thanks to the decisions of China and the ECB, predicted experts at Charles Schwab.
Finance shade
In China, analysts expected that the authorities take measures to support the economy, and various tracks were considered. The announcement Friday of this rate cut is nonetheless a surprise.
This lower interest rate “will primarily benefit larger companies, which are typically Crown corporations that finance from banks, “said Mark Williams, chief economist at Capital Economics.
According to him, the decline does not necessarily mean therefore a revival of growth, smaller companies continue to borrow dearly to the “shadow finance”.
“We believe that the impact on the real economy will be very limited,” confirmed to AFP Li-Gang Liu economist based in Hong Kong to the Australian bank ANZ.
“Their action is probably due to the fact that they are under strong pressure to further loosen monetary policy,” he added.
Hu Xingdou, economist at the Beijing Institute of Technology this fall surprise “shows that the economic conditions of China are not very good.”
But “lower rates interest could encourage mobility and promote economic growth, “he said.
In July-September 2014, the growth of gross domestic product (GDP) stood at Chinese 7 3%, its lowest level since the first quarter of 2009, including weighted by the real estate downturn.
Many analysts expect Chinese growth for 2014 of 7.3% (against 7.7% in 2013 ) or the weakest performance of the country for nearly a quarter century.
“We believe that growth (in China) still faces significant negative pressures, requiring the establishment of more fiscal and monetary measures “had finally said Thursday Qu Hongbin, an economist at HSBC, commenting on the latest gloomy figures on Chinese manufacturing.
The Chinese central bank also said Friday that it would continue if necessary, to inject liquidity into the banking system.
There are two weeks in Beijing by welcoming the leaders of the Asia Pacific Forum of APEC, Chinese President Xi Jinping had sought reassurance about the health of China, emphasizing the need for the country to rebalance its business model.
“Some wonder whether the growth rate of China will continue to s’ erode and whether it will succeed in getting out of its difficulties. Indeed, there are risks, but they are not so scary as that, “said at the time the Chinese number one.
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