China’s Central Bank cuts benchmark interest rates

China’s central bank has cut its benchmark interest rates for the second time in two months, in a bid to arrest slowing economic growth.

Benchmark lending rates will be cut from 6.31% to 6%, while deposit rates will fall from 3.25% to 3%.

The rate cuts will come into force on Friday and closely follow on from the last cuts made on 7 June.

Before these moves, the People’s Bank of China had not cut interest rates since 2008.

Commenting on the move, Rupert Armitage, director at Shore Capital, said: “China are cutting rates because they’re experiencing a slowdown.

“Everybody’s been concerned about the economy, but now they’re actually doing something about it.”

The central bank’s rate cuts come on the back of a gradual liberalization of China’s banking system.

Banks can now compete on the interest rates they offer customers, within a stipulated range.

China’s export growth has been hit by a fall in demand from two of its biggest markets, the US and Europe, still struggling with the global debt crisis.

China’s economy grew at an annual rate of 8.1% in the first quarter, the slowest pace in almost three years.

It hopes lower interest rates will help boost domestic demand.