The People's Bank of China on Monday announced unexpectedly that it would be lowering the RMB standard savings rate and small and medium business savings rate. This is the first rate decrease since October 2002.
Economic experts say this change of policy was due to the slowing economic growth and the worsening international finance and banking situation. It indicates a change of macro economic policy from capping inflation to protecting growth, and also indicates the decision-making authorities are nervous about the current economic slide.
It's the first rate cut from the People's Bank of China in six years. Since embarking on a policy of raising rates in October 2004, the central bank has raised the mortgage interest rate nine times, and has raised the savings interest rate eight times.
The People's Bank of China announced that beginning September 16 it would lower the standard savings rate by 0.27 percent. As for the short and medium term, the Central Bank would use the principle of more adjustments in the short term, fewer adjustments in the long term.
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