2012-06-10

Chinese interest rates liberalized as part of rate cut

China's central bank has given deposit and lending rates a wider band.

Lowered Interest Rates 'a Step Toward Liberalization'
Based on the size of current outstanding loans, a 0.25-percentage-point cut in lending rates means the combined interest payout could be reduced by 145 billion yuan, Liu said.

Under the new rule, the interest rate for one-year deposits can rise to 3.575 percent, 10 percent above the benchmark rate and higher than the old 3.5 percent level.

The adjusted one-year lending rate can drop further to 5.04 percent, 20 percent less than the benchmark lending rate.

This is in contrast to the old rule which stipulated that deposit rates cannot exceed the benchmark level and lending rates are at most 10 percent below the benchmark level.

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