Wed Sep 25 02:25:00 UTC 2024: ## China Slashes Key Interest Rate in Latest Bid to Boost Ailing Economy
**BEIJING** – China’s central bank has taken another step to stimulate its struggling economy, cutting a key interest rate by 0.3 percentage points to 2.0 percent. This move comes a day after the bank announced a series of measures designed to boost growth, including a reduction in bank reserve requirements and lower mortgage rates.
The latest move, announced Wednesday, targets the medium-term lending facility, which sets the interest rate for one-year loans to financial institutions. The rate was last lowered in July.
The world’s second-largest economy has struggled to achieve a post-pandemic recovery, prompting Beijing to set a growth target of five percent for 2024. However, analysts warn that this goal may be optimistic given the economic headwinds facing the country, particularly in the property sector.
Among the measures unveiled Tuesday, the People’s Bank of China announced a reduction in the amount of cash banks must hold in reserve, injecting around a trillion yuan ($141.7 billion) into the financial market. Additionally, the bank lowered interest rates for existing mortgages, a move that will benefit 150 million people across China, according to central bank chief Pan Gongsheng.
Beijing also introduced a “swap programme” allowing firms to acquire liquidity from the central bank, aiming to improve their access to funds for stock purchases.
While the announcements have been met with a surge in Hong Kong stock markets, analysts remain cautious. They argue that more drastic measures are needed to address the deep-rooted challenges facing China’s economy, particularly in the property sector.
“Rate cuts are no longer enough to boost growth in China,” said Shehzad Qazi of China Beige Book. “Beijing needs a more powerful household stimulus plan,” he added.
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