China Financial Daily

Central Bank Cut the Interest Rate
Out of step with previous speculation that the central bank will cut interest rates of 5th within 3 months. From the central bank announced  that  1-year benchmark deposit and lending interest rates will be lowered down 0.27 percentage points on each from  December 23  (others make corresponding adjustment). In addition, the central bank also lowered the deposit reserve ratio by 0.5%.This conduct is considered to follow and coordinate with Japan and the United States who cut interest rates earlier. Now the whole world is wholeheartedly dealing with future deflation. Deflation is considered to be the worst “enemies”, and “spiral of a vicious circle”, which is caused by the deflation would drag the economy into a “bottomless” abyss. Even now there are decorative “anti-deflation in short-term and anti-inflation in long-term ” speeches. As what had been done by the Federal Reserve of US: this is an expedient measure to lower down the interest rates to almost zero. Once the economy turn for the better, the rates will be quickly back up.

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