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Reuters

Liberalising China’s interest rates is a key element of financial reform, the country’s central bank said on Monday, adding that cutting borrowing costs and lowering the amount of cash banks must keep as reserves do not equate to quantitative easing.
The comments come after the central bank cut interest rates on Friday for the sixth time in less than a year and again lowered the reserve requirement ratio for banks in a bid to jump start growth in China’s stuttering economy.
READ MORE: China's sixth interest rates cut in a year seen as bid to kick-start faltering economy, economists say
Lowering interest rates and cutting the reserve ratio are “normal monetary policy” practice, the bank said in a statement published on its website on Monday.
The People’s Bank of China cut the one-year benchmark bank lending rate by 25 basis points to 4.35 per cent while the one-year benchmark deposit rate was lowered by 25 basis points to 1.50 per cent.
The reserve rate was cut by 50 basis points for all banks, taking the ratio to 17.5 per cent for the biggest lenders.
The bank also said on Friday it was freeing the interest rate market by scrapping a ceiling on deposit rates.


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