Rate cuts to have little impact on lenders

The move by the People's Bank of China to further free up deposit rates will have a limited impact on lenders and not trigger any sharp increases in deposit costs, economists said.

The central bank has removed the ceiling on bank rates for fixed deposits with terms ranging from two to five years starting Wednesday. The cap on demand deposits and other deposits with terms ranging from seven days to one year remains unchanged.

Previously, commercial banks offered deposit rates of 1.2 to 1.3 times the benchmark deposit rate, although the ceiling was 1.5 times the benchmark rate.