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Su sees more room to cut rate

CHINA has room for further interest rate cuts in the face of the global financial crisis, a central bank official said yesterday.

The benchmark deposit and loan interest rates have been reduced five times since last September and the room for further adjustment is "smaller but still exists," said Su Ning, vice governor of the People's Bank of China.

There's also "quite a big room for cutting the banks' reserve requirement ratio," Su told Xinhua on the sidelines of the annual sessions of the country's lawmakers and political advisers.

"We still have plenty of space in monetary policy maneuvers," said Su, also a member of the National Committee of the Chinese People's Political Consultative Conference, a national political advisory body.

He said that the central bank will better carry out the moderately easy monetary policy "by various means including open market operations, reserve requirement ratio and interest rate adjustment."

To help the Chinese economy fight the financial crisis, the central bank has slashed the one-year benchmark interest rate for loans to 5.31 percent and that for deposits to 2.25 percent.

The current interest rate level remains above the United States key interest rate range of zero to 0.25 percent and the European Union's 1.5 percent, both record lows in the two weakening economies.

Meanwhile, the ratio of deposits that banks need to set aside was cut four times. Su said that the present ratio is between 13 percent and 15 percent.

Su said a favorable lending policy on the property market stated on Thursday by Premier Wen Jiabao in the government work report is not a further loosening of curbs on second house purchase as some perceived. According to the report, individuals "who meet relevant criteria and apply for bank loans to purchase a second home for personal use" will enjoy similar preferential lending policies that apply to the purchase of first homes.

The "relevant criteria" refer to the rule of allowing people with "smaller-than-average" apartments to buy a second home under favorable loan terms, which was already announced last year, hence there's no substantial change in the policy on second home buyers, said Su.


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