China has called on banks to reduce deposit rates

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Chinese officials have urged commercial banks operating in China to cut interest rates on deposits as part of an effort by Chinese authorities to support the world’s second-largest economy.

Citing Bloomberg News Agency information sources, commercial banks have received a recommendation to lower interest rates on deposits by 10 basis points for various deposit periods, and this recommendation was driven by a self-adjusting mechanism for interest rates. It is overseen by the Central Bank of China.

The recommendation is not mandatory, but sources said that when the People’s Bank of China releases quarterly ratings of (central) banks, banks that adhere to it will benefit by raising their ratings. Recommendation will not be reduced.

The People’s Bank of China’s monetary policy analysts have kept its one-year lending rate unchanged at 2.85%, much to the disappointment of most economists who had been expecting a rate cut in favor of the economy.

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