To combat the economic slowdown, the People’s Bank of China lowered the base interest rate of refinancing by 0.25 percentage point to 3.25 percent, for the first time since 2008.
In addition, the interest rate for 12-month loan was reduced from 6.56 to 6.31 percent per annum. According to Chinese laws, banks can offer customers a rate of 20 percent discount compared to the level established by the Central Bank.
Central Bank of China has had a long fight in order to prevent bubbles and economic overheating. The current change may reflect the fact that the authorities are much more concerned about a potential recession. For the same purpose the state has delayed the introduction of more stringent rules for banks, which were supposed to start now.
Economic growth in China have decreased substantially over the past few months. Thus, the country’s GDP in January-March grew by only 8.1 percent, which means a slowdown for the fifth consecutive quarter. It is expected that in the current quarter GDP growth will amount to 7-7.5 per cent.