Cutting Interest Rate Still A Long Way to Go? Experts: Zero Rate Impossible

On 22 December, the People's Bank of China announced decrease one-year RMB benchmark deposit and loan rates by 27 basic points with the decrease of reserve requirement ratio by 50 basic points, other maturities being adjusted accordingly. Since September this was the sixth cutting of one-year benchmark rate by the People's Bank of China, which in line with market expectation. Anyway different points said, it is impossible for China to sharply cut interest rate considering to keep stability of foreign exchange rate, and that next year America could not cut its rate because of its coming into zero rate period.

 

Economist Dina Olson from Moody Economic Internet otherwise indicated, in case of a momentary deflation expected, the People's Bank of China could not decrease benchmark rate to zero level.

 

At present, beside loose monetary policy to be effected, China's Government was considering various kinds of measures to revive economic growing, including development of infrastructures, stimulating real market till improving medical health and education, etc.