China cuts interest rates, further easing likely

China has further loosened monetary policy in a bid to support economic growth, likely in reaction to Friday's weaker than expected reading on international trade for April, economists said, with further easing measures considered to be highly likely over the rest of the coming year.

China further loosened monetary policy in a bid to support economic growth, likely in reaction to the weaker than expected reading on international trade for April released on 8 May, economists said, with further easing measures considered to be highly likely over the remainder of 2015.

On Sunday, the 12-month lending rate was cut by 25 basis points to 5.10% and the country's other benchmark rates by a similar amount.

The one-year deposit rate would also be reduced by 25 basis points, dropping to 2.25%, the People's Bank of China (PBoC) announced.

The changes would become effective on 11 May.

"Today’s cut to benchmark interest rates is not a sign of panic as some will argue but a rational response to weaker-than-expected data. Policymakers have room to act more forcefully if needed but are choosing to dole out stimulus in a measured way," Capital Economics wrote in a research note e-mailed to clients immediately following the announcement.

Sunday's decision marked the third reduction in six months.

The policy announcement came as the economy continued to struggle to meet the 7% growth target set for 2015 by Premier Li Keqiang.