China Slashes Rates in Aggressive Move to Foster Growth

China's central bank slashed borrowing costs by the biggest margin in a decade, in a strong signal that government efforts to support the economy didn't end with the announcement of a massive stimulus plan just over two weeks ago, the Wall Street Journal reported today. The move, announced Wednesday, brings the benchmark one-year lending rate down by 1.08 percentage points to 5.58%, with the benchmark one-year deposit rate cut by the same margin to 2.52%, the People's Bank of China said in a statement. At the same time, banking regulators are also moving to shore up Chinese lenders, urging banks to step up provisions against losses and paving the way for a deposit-insurance program to be set up by next year. The rate cut is the central bank's fourth since September, moves that together will bring the benchmark lending rate down by a total of 1.89 percentage points. The central bank on Wednesday also trimmed reserve requirements for banks, freeing up more cash for lending. It said the latest changes are intended to "ensure an ample supply of liquidity in the banking system, encourage stable growth in lending, and make use of the positive role of monetary policy in supporting economic growth." Read more. (Subscription required.)