China cuts interest rates as part of global action

China participated in a global effort to shore up financial markets on Wednesday as it cut interest rates and banks’ required reserve ratios for the second time in a month, Reuters reported. The People’s Bank of China (PBoC) gave no reason for the move, which was announced in conjunction with rate cuts by the central banks of the US, euro zone, UK, Canada, Switzerland and Sweden. It is the first time the PBoC has changed interest rates at the same time as other central banks. As of Thursday, rates charged on one-year bank loans fell to 6.93% from 7.20%, while the one-year deposit rate decreased to 3.87% from 4.14%. Bank’s required reserve ratios – the proportion of total deposits that banks must hold in reserve and therefore not lend out – will fall by half a percentage point from October 15. This means big banks will operate to a ratio of 17% and small banks to a ratio of 16%.