The People's Bank of China (PBOC) will cut interest rates by an average 0.5 percentage points today, the third cut this year and the latest part of Beijing's drive to meet its much-trumpeted 8 per cent economic growth target for this year. Official media said the bank's annual lending rate would fall from 6.93 per cent to 6.3 per cent while the deposit rate would be reduced on average from 4.77 per cent to 3.78 per cent. The rate cut is aimed at 'encouraging investment in housing and infrastructure, boosting internal demand and maintaining a strong and healthy growth in gross domestic product,' a bank official was quoted as saying. The bank last cut interest rates on July 1 and today's reduction is only the sixth decrease since 1996. A commentary by Xinhua indicated this year's attempts to increase monetary supply and attain growth targets of 8 per cent had not been entirely successful. 'To realise this year's target of 8 per cent economic growth, the PBOC has adopted a series of policies to increase monetary supply, with positive effect,' it said. 'However, market consumption is not entirely enthusiastic, market prices, although stabilising, are not going up and realised profits are not rising.' The main beneficiary of the cuts will be state-owned enterprises, the PBOC said. Within a year, enterprises stand to save 23 billion yuan (about HK$21.39 billion) in interest payments as a result of the cuts, the PBOC estimated. 'Next year China's economy will face several difficulties and this interest rate cuts reflects the importance of PBOC policy to advance economic growth,' it said. Latest estimates put this year's economic growth at about 7.6 per cent compared with 8.8 per cent last year, while exports are expected to remain unchanged compared with a rise of more than 20 per cent last year. In a bid to stimulate flagging domestic demand, the government announced at the beginning of the year a three-year programme of infrastructure development worth US$750 billion. Beijing also pledged to overhaul the housing market by ending rent subsidies and encouraging people to buy their own homes. Beijing has pledged repeatedly not to devalue the yuan despite pressure from a series of devaluations in the region, leading to a rapid slowdown in exports which has cut economic growth. Along with the rate cuts on savings and lending, the PBOC also announced reserve deposit and relending rates would be slashed. Deposit rates on average will be cut 0.5 per cent, but current account and three-month fixed deposit rates would not be affected. One-year fixed deposit rates would be cut from 4.77 per cent to 3.78 per cent, with similar cuts made on similar deposit periods. Working capital lending rates also would be cut on average by 0.5 per cent, with one-year working capital rates dropping from 6.93 per cent to 6.3 per cent. PBOC reserve deposit rates were also cut from 3.51 per cent to 3.24 per cent; and relending rates were cut from an average of 5.61 per cent to 5.06; discount rates were also cut to 3.96 per cent.