The People's Bank of China (PBOC) announced on November 21 that it has decided to cut benchmark interest rates for the first time since July 2012, effective as of November 22.
Accordingly, the one-year lending rate has been reduced by 0.4 percentage points to 5.6 percent, while the one-year deposit interest rate has been cut by 0.25 percentage points to 2.75 percent. In addition, the upper limit on what banks can pay customers on their deposits has been adjusted to 1.2 times the benchmark rate from the previous 1.1 times. The PBOC said that its move did not mean a change in monetary policy and that there is no need to apply a strong stimulus to the economy. It went on to say, however, that it would continue an orderly liberalization of deposit rates.