China’s central bank cut interest rates
for the second time in less than four months, in a fresh sign that the
country’s leadership is becoming more aggressive in trying to arrest flagging
economic growth although the ineffectiveness of previous measures reflect that
it is a tall task for the Chinese government to arrest the slide.
The rate cut by the People’s Bank of China,
announced on Saturday, as the world’s second-largest economy struggles with an
array of ills: a slumping property market, more money being sent offshore and
growing risks of falling prices that, in effect, are pushing up borrowing costs
for businesses.
Deflationary risk and the property market
slowdown are two main reasons for the rate cut this time.
The cut, effective Sunday, lowers by a quarter
percentage point both the benchmark one-year loan rate, to 5.35%, and the
one-year deposit rate, to 2.5%.
Growth in China’s embattled steel industry has
declined for the tenth month in a row despite its recent rebound in activity.
The Purchasing Manager Index, which measures activity in the sector, stood at
45.1 for February. Any figure above 50 indicates expansion, while below 50
suggests contraction.
Cut in lending rate will certainly do well in perking
up the demand in steel and other sector as well. Reality and property sector in
China will ……..
Source: steelguru