Bank loan cost cut, reserve ratio eased

The central bank yesterday cut the cost of bank loans, the first time since 2002, and lowered the proportion of money lenders must have as reserves, the first such move in nine years, to keep the economy from sliding further.

The benchmark lending rate will be lowered by 0.27 percentage point to 7.20 percent from today, but the interest rate of deposits remains unchanged.

The 1 percentage point cut from the reserve requirement ratio of 17.5 percent does not apply to the five biggest banks and the Postal Savings Bank, the People's Bank of China (PBOC) said on its website. And banks in areas hit by the devastating May 12 earthquake will have their ratio cut by 2 percentage points. These changes will come into effect from Sept 25.