GENEVA, SWITZERLAND – China cut key interest rates for the first time since 2008 Thursday 7 June, in an effort to counter the deepening economic slowdown as Europe’s debt woes threaten global growth.
The benchmark one-year lending rate was reduced .25 percent to 6.31 percent, whilst the one-year deposit rate fell from 3.5 percent to 3.25 percent.
The move comes two days before China is expected to announce inflation, investment and output figures and may signal the release of grim economic news.
Europe is China’s most important trading partner, and falling demand in the European Union has sparked concern of reduced domestic consumption as industrial production begins to drop. China’s economy grew at an annual rate of 8.1 percent till the first quarter of 2012, the slowest it has grown in the past three years. The IMF recently warned that China’s growth could be halved in 2012 as a result of Europe’s slowdown.
European stocks and US futures indexes continued to gain on Thursday on the news, which followed rate cuts in Australia earlier this week.