China Cuts Benchmark Rates for Second Time in Month

China cut benchmark interest rates for the second time in a month and allowed banks to offer bigger discounts on their borrowing costs, stepping up efforts to reverse a slowdown in the world’s second-biggest economy. The one-year lending rate will fall by 31 basis points and the one-year deposit rate will drop by 25 basis points effective tomorrow, the People’s Bank of China said on its website today. The PBOC also widened the discount banks can offer on loans to 30 percent from 20 percent, according to the statement. China is moving more aggressively to promote growth as Europe’s turmoil crimps exports and domestic property restrictions curb the housing market. Today’s cuts coincided with decisions by euro area and U.K. central bankers to increase monetary stimulus and preceded government data next week that may show expansion decelerated for a sixth quarter. “Although most people were expecting further cuts, very few were expecting the second one to come so soon,” said Mark Williams, Asia economist at Capital Economics Ltd. in London. One possible reason for today’s action is that “policy makers have had an early look at the June data and didn’t like what they saw, suggesting the economy is weaker than they previously thought.”