BEIJING — China’s central bank cut its benchmark lending rate to record low and lowered reserve-requirement ratios for some lenders, accelerating monetary easing as an economic slowdown threatens to drive up joblessness.
In the fourth reduction since November, the one-year lending rate will be reduced by 25 basis points to 4.85% effective from Sunday, the People’s Bank of China said on Saturday.
The one-year deposit rate will fall by 25 basis points to 2%, while reserve ratios for some lenders including city commercial and rural commercial banks will be cut by 50 basis points, according to the statement.
China is battling excess industrial capacity, local-government debt and capital outflows, with the economy expanding at the slowest pace since 2009 in the first quarter.
The latest reduction by the central bank, which adds to its own monetary easing and that of about 30 counterparts around the world this year, follows May data showing stabilisation in industrial output and lending.
"A more convincing rebound may come next quarter," Wang Tao, chief China economist at UBS Group in Hong Kong, said before the announcement. "With real activity still weak and deflationary pressures mounting, policy easing has continued to escalate in recent weeks, the boost from which should come soon."
Industrial output accelerated and aggregate financing beat estimates in May, pushing Bloomberg’s monthly gross domestic product tracker to the quickest growth since January.
Premier Li Keqiang announced a growth target of about 7% for 2015, which would be the slowest annual expansion since 1990. Policymakers are juggling the need to keep growth from slipping too far with plans to press ahead with reforms.