Drastic monetary easing

The most aggressive interest rate cut in a decade indicates that the People's Bank of China has come to terms with the huge impact the ongoing global financial crisis and economic downturn will exert on the Chinese economy.

China's central bank announced on Wednesday a massive cut of 108 basis points that brings loan and deposit rates down to 5.58 percent and 2.52 percent respectively.

As the fourth reduction in interest rates since September when the first signs of a sharp slowdown began to appear, the latest move has made clear Chinese authorities' concerns about the rising risk of a growth slump and deflation.