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China in shock interest rate cut

China in shock interest rate cut
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China has surprised many by cutting interest rates as it works to preserve growth in the world’s second-largest economy.

The country looks set to post its slowest growth in nearly a quarter century.

The interest rate cut, the first in two years, comes as factory growth is sluggish and the property market weak.

The knock on effects have hit furniture sales and construction products.

The People’s Bank of China has cut the one-year deposit rate by 25 basis points to 2.75 per cent and the one-year lending rate by 40 basis points to 5.6 per cent.

The rate will be effective from Saturday.

The Chinese central bank said it was also giving banks more freedom to set their interest rates.

The risks faced by China’s economy are not that scary and the government is confident it can head off any dangers.