World News | China’s state-owned banks cut deposit rates: Report

Beijing [China], June 11 (ANI): China’s largest state-owned bank cut deposit rates this week to stimulate consumer spending. The rate cut, the second since last year, is a sign of growing concern that China’s economy has not rebounded as strongly as expected after COVID-19 restrictions were lifted, The New York Times reported.

Six commercial banks have announced to cut interest rates on demand deposits from 0.25% to 0.2%. Banks have cut interest rates on fixed-term deposits, the report said.

Read also | Mayon volcano eruption, Philippines: More than 6,000 residents were evacuated near the crater after Mayon volcano spewed ash.

The Industrial and Commercial Bank of China cut its five-year deposit rate to 2.5% from 2.65% and the three-year deposit rate to 2.45% from 2.6%, The New York Times reported, citing the bank’s website.

Lower deposit rates are one lever policymakers can use to stimulate spending. According to The New York Times, it is hoped that lower interest rates will incentivize consumers to spend or invest, rather than park their savings in banks.

Read also | Is Vietnam delivering on its environmental commitments?

The bank’s decision shows that consumer spending, the main driver of economic growth, remains subdued. After China lifted COVID restrictions and reopened its economy last year, pent-up demand is expected to encourage people to start spending freely. However, this has not happened across all sectors of the economy.

Larry Hu, chief China economist at financial firm Macquarie Group, said that based on news reports, the People’s Bank of China may cut lending rates or take other measures to stimulate the economy in the coming months.

China had forecast its economy would recover from one of its slowest growth years in decades last year, with gross domestic product growing by around 5% by 2023. However, weakness in the Chinese economy persists.

In the first three months of this year, China’s economy grew by 4.5%. However, the outlook does not seem rosy. China’s second-quarter gross domestic product data is expected to be released next month.

According to news reports, youth unemployment is at an all-time high. The housing market continues to slump with few signs of recovery. Betty Rui Wang, senior China economist at Australian bank ANZ, said that according to news reports, Chinese households and private businesses had weak confidence in the economy.

According to her, post-COVID-19 demand helped drive the economy earlier this year. However, there are signs that May is a turning point. “It’s losing steam,” she further added, according to The New York Times.

Many economists and analysts had been looking forward to an announcement of the measures after a Politburo meeting scheduled for next month. The Politburo is the highest decision-making body of the Communist Party of China. (Arnie)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)