The central bank also made a similar combination move in late August.
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The People’s Bank of China (PBOC) lowered its benchmark interest rates by 25 basis points on Friday, alongside a half-percentage cut in the reserve requirement ratio (RRR), in a bid to jumpstart a slowing economy.
For the period starting 28 September till date, the Shanghai Composite Index has seen an upside of 11.15%, Australia’s S&P/ASX 200 has increased by 4.59% and Japan’s Nikkei 225 has grown by 7.56%.
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 China Merchants Bank set a one-year deposit rate at 1.75 percent, compared with the benchmark rate of 1.5 percent.
But most banks’ funding liabilities were already reflected in market pricing, and an improvement of interbank liquidity would lower financing costs, Goldman Sachs Group Inc. said in a note.
China’s economy has grown at an average annual rate of 10% for the past three decades, but has been cooling down in the past few years.
Asian stock markets Monday welcomed mainland China’s latest cut in interest rates ahead of this week’s policy meeting, but analysts warned the move indicates further weakness in the world’s No. 2 economy.
Total turnover on the Shanghai and Shenzhen bourses stood at 1.1 trillion yuan (about 173 billion US dollars), slightly up from 1.04 trillion yuan on the previous trading day.
Meanwhile, patchy USA economic data has deferred expectations for a rise in interest rates for the rest of 2015.
On Friday, the People’s Bank of China cut its interest rates for the sixth time in the last 12 months, as Beijing looks to boost its flagging economy. And the Bank of Japan is forecast to add to its stimulus.
China’s economic growth in the third quarter dipped to a six year low of 6.9 percent. Returns on 10-year bonds were down to 3.07%, the lowest since 2009. The contract soared $1.22 on Friday to close at $44.60.
In a statement on Monday, the PBOC said the eventual aim is to no longer publish the benchmark rate.
The rebound in Chinese equities spurred by the government’s efforts to boost growth are probably set to fade as the measures underscore fundamental weakness in the economy, according to Barclays PLC, Blackfriars Asset Management Ltd and BlackRock Inc.
The CSI300 index fell 1.9 per cent to 3,522.00 points by the end of the morning session, while the Shanghai Composite Index lost 1.8 per cent to 3,367.33. Brent crude, used to price global oils, added 25 cents to $48.24 in London.
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Supporting the yuan has drained China’s foreign exchange reserves, although cutting bank reserve requirements – and maintaining trade surpluses – help offset any impact on markets.
