05/11/2015, 00.00
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Yuan stable as interest rates cuts give breathing space to economy

GDP fell to 7% in the first quarter and analysts fear that China will not reach the target of 7%. The rate cuts should help to increase market liquidity and help small and medium-sized enterprises, improving employment.

Hong Kong (AsiaNews) – The Yuan was fairly stable on markets today, after China’s central bank revised interest rates for the third time in six months. The fear is that the Yuan will be further depreciated to promote Chinese exports.

Yesterday, the People's Bank of China lowered the interest rate for bank loans by 25 points, to 5.1%, and the interest rate for deposits by 25 points, to 2.25%. The measure was introduced this morning.

Greater capacity for loans should help raise more liquidity in the economy, leading to more jobs and better support of small and medium enterprises.

The Chinese economy has fallen from last year’s 7.4% to 7% in the first quarter of 2015, and analysts expect that China will not reach this year's target of 7%. Exports fell 15% in March and by a further 6.4% in April.

Interest rates cuts are also an attempt to curb deflation: producer prices have in fact declined by 4.6% in April and have been in a steady decline for more than three years. The consumer price inflation is 1.5%.


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