BANGKOK -- China's central bank on Saturday evening announced another round of interest rate cuts. The People's Bank of China set the one-year lending rate at 5.35% and the deposit rate at 2.5%. Both cuts of 0.25 basis points take effect Sunday.
The cuts, the second round in three months, come as the world's second largest economy is showing signs of waning.
The central bank also said it will give more discretion to banks to adjust their own deposit rates. Banks can now offer customers a rate up to 1.3 times higher than the official deposit rate, up from 1.2 times.
The monetary authority's latest move was not scheduled, as usual, but had been widely expected. Mark Williams, chief Asia economist at Capital Economics, was among the analysts who saw the lower rates coming. He and his team are now "forecasting one more cut to benchmark rates before the middle of the year." However, he expects credit to continue to slow, since the "binding constraints on bank lending are the official lending quotas" and not the rate.
Earlier in February, the central bank cut the reserve requirement ratio, effectively allowing banks to keep less cash on hand.