Chinas Biggest Banks Cut Deposit Rates to Spur Consumer Spending
The New York Times The News
In the latest attempt to boost consumer spending, Chinas largest state-run banks lowered interest rates on deposits this week. The rate cuts, the second such reductions since last year, reflect a growing concern that the worlds second-largest economy has not rebounded as strongly as expected after lifting its restrictive zero-Covid measures.
Six commercial banks all announced that they had lowered the rate for demand deposits, essentially a checking account, to 0.2 percent from 0.25 percent. The banks cut the interest rates on deposits covering a fixed period of time.
The Industrial and Commercial Bank of China, the countrys biggest lender by assets, cut the five-year deposit rate to 2.5 percent from 2.65 percent and lowered the three-year rate to 2.45 percent from 2.6 percent, according to the banks website.
Why It Matters
A reduction in the deposit rates is one lever that policymakers can use to stimulate spending. The hope is that the lower rates will give consumers an incentive to spend or invest money instead of parking their savings in the bank.
