News Flash

Wednsday evening China announced its second round of interest rate cuts in less than a month, just before its US counterpart--Federal Reserve--took the same move to ease worsening global financial conditions.

Zhou Jianming, an analyst in Pacific Securities Company, interpreted this move as a second international joint action.

Yesterday evening, the People's Bank of China, the country's central bank, cut its one-year benchmark deposit and lending rates by 0.27 percentage point from Oct 30, alongside corresponding adjustments on other grades.

Zhou said that macro-economic data showed China's economy is facing recession risk, so it was necessay to stimulate domestic credit demand through rate cuts.

On the other side of Pacific Ocean, the US Federal Reserve also decided to lower its target for the federal funds rate by 50 basis points to 1%, in order to alleviate continued strains in credit markets.

In its statement, the Fed said "The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures... Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."

The Fed also approved a 50-basis-point decrease in the discount rate to 1.25%