China to cut interest rate amid widening global crisis

BEIJING, Oct. 8 Kyodo - China's central bank announced Wednesday it is cutting a key interest rate in a
move aimed at boosting the economy facing a widening global financial crisis.

The People's Bank of China said in a statement on its website that its one-year
loan rate will be reduced by 0.27 percentage point from Thursday.
The rate cut follows one in September, which marked the first since 2002 and
reversed the country's policy in the recent past of raising interest rates and
tightening lending.
The amount of cash that smaller banks must hold as reserves will also be cut by
0.5 percentage point from Oct. 15, the bank said, to encourage lending and
greater investment.
China's move came as six central banks from the United States, Canada and
Europe announced coordinated interest cuts. While the one-paragraph statement
on the Chinese bank's website was posted around the same time, it made no
mention of the coordinated action.
The State Council, the country's Cabinet, said it will scrap the 5 percent
individual income tax on savings interest earnings from Thursday in another
step aimed at bolstering the economy, the state-run Xinhua News Agency
reported.