BEIJING, Oct. 9 (UPI) -- China's central bank, falling in line with central banks of major economies, has cut both the interest rate and the cash reserve ratio for its commercial banks.
The People's Bank of China announced the deposit and lending rates would be cut by 0.27 percent point and the reserve ratio by 0.5 percent point effective next Wednesday, Xinhua reported.
The move is designed to boost China's domestic economy in the face of the deepening global financial crisis, the state-run Chinese news service said.
"This was mainly out of concerns over an economic slowdown," Ba Shusong of the Chinese Cabinet's Development Research Center was quoted as saying.
The monetary policy step was the second one in less than a month. On Sept. 16, the central bank, for the first time in six years, cut the benchmark one-year lending rate by 0.27 percentage point, Xinhua said. Subsequently, the bank also cut the reserve requirement at medium- and small-sized lenders by 1 percentage point.
China's gross domestic product is slowing down and its exports are falling because the global credit crisis has reduced demand, leading to the closure of thousands of exporters and job losses, the news agency said.
Separately, the Chinese Cabinet decided to scrap the 5 percent individual income tax on savings interest earnings.
