China's central bank said on Monday it will reduce the benchmark loan interest rate and the reserve requirement ratio for commercial banks to ensure a steady and rapid economic growth.
The benchmark interest rate for one-year yuan-denominated loans will be adjusted down 0.27 percentage points from Tuesday, while the ratio of deposit that lenders are required to set aside will be down 1 percentage point from September 25, said the People's Bank of China.
However, the country's major lenders will be exempt from the reserve requirement ratio adjustment. They include the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications and the Postal Savings Bank of China.
The reserve requirement ratio will be reduced by 2 percentage points for local financing institutions at areas badly hit by the Wenchuan earthquake in May, said the central bank.
The move was to "solve prominent problems in the current economic operation, implement the principle of giving different policies for different needs and optimizing the economic structure, and ensure a steady, rapid and sustained development", said the bank in a statement.
After the adjustment, the interest rate for one-year loans in Chinese currency will be 7.20 percent and the overall reserve requirement ratio will be 16.5 percent, down from a record 17.5 percent after five hikes in a row this year.