China has cut interest rates for the first time in more than six years in what is being seen as a move to shore up economic growth in the face of deteriorating global financial conditions, the Wall Street Journal reported. The benchmark one-year lending rate has fallen 0.27 percentage point to 7.20%. Deposit rates have not changed. This is perhaps in recognition that the rates are already low compared to the inflation rate. The People’s Bank of China (PBOC) also said the proportion of total funds that small banks must keep on reserve – and therefore not lend – will be reduced by one percentage point from September 25. The PBOC said the measures were intended to "solve the current prominent problems in the economy." However, it is likely no coincidence that the announcement came just hours after Wall Street was rocked by the news that Lehman Brothers is filing for bankruptcy protection and that Bank of America is to buy troubled Merrill Lynch.