China cuts interest rates in new growth effort

[December 22, 2008]  BEIJING (AP) -- China cut a key interest rate Monday just four weeks after its biggest rate cut in 11 years in a new effort to revive deteriorating economic growth amid tensions over rising job losses.

The benchmark one-year lending rate will fall by 0.27 percentage point to 2.25 percent, effective Tuesday, the central bank said. It was the fifth cut in four months and came after the key lending rate was slashed by 1.08 percentage points on Nov. 26. It left the benchmark rate at its lowest level since February 2004.

Beijing has cut interest rates and is pressing banks to lend in hopes of encouraging wary Chinese consumers and businesses to borrow and spend in an effort to support a massive government stimulus package launched in November.

There have been protests by laid off workers, and Chinese leaders have warned that more job losses could fuel instability.

[Associated Press]

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