China cuts interest rates to boost growth

DHAKA: China has cut its key interest rates, in a surprise move designed to boost its slowing economic growth.

The benchmark one-year loan rate was cut by a quarter of one percent to 6.31%.

The People’s Bank of China also cut deposit rates from 3.5% to 3.25%.

Earlier, China, which is growing at its slowest rate for three years, delayed the implementation of tougher bank capital rules amid concerns that they may hurt lending.

The rules, delayed until January next year, will increase the minimum cushion of capital a bank must keep to absorb losses on their loans.

There were fears that such a move may curb lending at a time when Beijing has been trying to boost growth amid a slowdown in its economy.

China had planned to introduce the rules at the start of this year, reports BBC.

The banks will be given a reasonable transition period to meet the new capital requirements ‘to help maintain appropriate credit growth’, China’s cabinet said in statement on its website late on Wednesday.

BDST: 1852 HRS, JUN 7, 2012

Edited by Robab Rosan, Cultural Affairs Editor