- Frederic Neumann, co-head of Asian economics at HSBC Holdings Plc
In a widely expected move the People's Bank of China announced cuts of benchmark interest rates effective Monday amid concerns over the nation's economy, holding door open for further easing. The central bank has slashed rates for the third time in six months due to worse than expected economic downturn and deflationary threat. The PBoC cut benchmark lending and deposit rates by a quarter of a percentage point to 5.10% and 2.25%, respectively. Inflation remained soft, while exports and imports both decreased in April, underscoring the economy's struggle to reach Premier Li Keqiang's 2015 growth target of about 7%. The tone of the central bank's comments was more aggressive compared to those of previous policy decisions and suggested that the government is ready to proceed with these kinds of adjustments so long as China's low inflation environment persists.
China's consumer prices climbed slightly in April, whereas prices at the factory gate dropped faster than expected. China's consumer price index rose 1.5% in April from the previous year, up from a 1.4% increase in March, according to the National Bureau of Statistics, considerably below Beijing's inflation target of just below 3%. China's producer-price index plummeted 4.6% year-on-year in April, unchanged from the 4.6% decrease in March.
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