China cut interest rates and allowed banks to set aside smaller reserves, supporting an unprecedented global effort to unfreeze credit markets and ease the worst financial crisis since the Great Depression.
The one-year lending and deposit rates will be lowered by 0.27 percentage point to 6.93 percent and 3.87 percent effective tomorrow, the People’s Bank of China said on its Web site. It reduced the proportion of deposits banks must set aside as reserves by 0.5 percentage point starting Oct. 15.
The Federal Reserve, European Central Bank and four other central banks lowered borrowing costs by half a percentage point at the same time in an emergency coordinated action. China cut rates for the first time in six years on Sept. 15 to reduce the risk that worsening credit turmoil and weakening export demand will cause a slump in the world’s fourth-largest economy.