China Cuts Interest Rate Citing Growing Concerns Of Economic Slowdown, Will It Help?
Vinay Patel | | May 11, 2015 07:06 PM EDT |
After registering dismal figures across domains, the Chinese government has announced a massive interest rate cut to 5.1 percent in order to battle the economic slowdown in the country
The recently announced export and import figures were disappointing. To top it all, even the Chinese stock market is also not doing well, forcing the trade analysts to push the panic button. With China's performance being closely connected to the other economies in the Asia Pacific region, the country's economic performance is expected to affect the others as well, creating a massive shock wave that could lead to financial troubles. Given this situation, the government is taking several initiatives to combat this slowdown and put the country back on its track of growth. According to reports on BBC, the finance ministry approved a benchmark cut of 25 basis points followed by a dive in the interest rate as well. The new interest rate is 5.1 percent.
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The new rates will be effective from today and are expected to bolster the process of economic development. The reports on CNBC indicate that this is the third cut by the government since November last year. The loss of momentum in the economy's growth rate has prompted the government to ease the financial policies, cut interest rates and encourage investment. It is also reported that in the course of the year, the Chinese government is expected to implement more such measure to combat the slowdown.
When the growth figures of last year were published, the number stood at a mere 7.4 percent down from the 7.7 percent that the country had previously registered. What was even more disappointing was the fact that these figures were the lowest in the last twenty four years. This is what prompted the government to initiate the rate cuts. However, these interest cuts are yet to have the desired effect prompting rumors that more such measures could be expected in the near future.
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