27/12/08-China cuts interest rates for the fifth time since mid-September, but the cuts were smaller than many analysts had expected. The People’s Bank of China cut the one-year lending rate to 5.31 percent and the deposit rate to 2.25 percent, which was just a 27 basis point drop. The last cut in November was 1.08 percent, much larger than this time.
Some analysts thought the move would be greater, but “Apparently they think this will be sufficient to maintain financial stability in the near term,” said Ken Peng, economist with Citigroup in Shanghai.
The IMF has recently indicated that growth in China could ease considerably in 2009, with some predictions coming in at around 5 percent compared to 11.9 percent last year. The country’s target growth is 8 percent, and Premier Wen Jiabao said on state TV that “At present the most important mission is to maintain balanced and fairly fast growth in the economy, and to take more direct, beneficial and effective measures.”
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