China´s PBoC cuts rates and banks´ reserve requirements

The People´s Bank of China, the country´s monetary authority, has lowered its benchmark lending rate and the amount of cash lenders are required to hold in reserves.

Rate-setters in Beijing lowered the benchmark one-year lending rate by twenty five basis points to 4.85%, and the one-year deposit rate by an identical amount to reach 2%.

The amount of funds which banks with large portfolios of loans to the agricultural sector and small businesses are asked to keep on deposit at the central bank was also decreased.

While further monetary stimulus was widely expected it was the first time since October 2008 - during the worst moments of the past financial crisis, shortly after Lehman Brothers imploded - that interest rates and the central bank´s reserve requirement ratio were simultaneously lowered.

The decision also followed Friday night´s surprise announcement by Greek authorities that they would call for a 5 July referendum to voteon creditors´ demands.