China opts for measured response to days of stock market panic

Beijing cuts interest rates to support the real economy, but keeps some of its powder dry to avoid further damaging investor confidence

Beijing has taken action. After two days of painful stock market falls, the People's Bank of China (PBoC) has seen enough. Interest rates have been cut to put a floor under share prices and support the real economy.

The reduction in borrowing costs was modest but significant. The one-year lending rate went down by a quarter point to 4.6%. The reserve requirement ratio (RRR), which determines how much banks can lend to the economy, has been cut by half a percentage point.

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