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China Looks to Cushion Economy

China showed its determination to combat a slowdown in the world’s second-largest economy, cutting interest rates before a yearly gathering of the legislature where the Communist leadership typically unveils its goals for the year.

The People’s Bank of China announced a benchmark lending and deposit rate cut of a quarter percentage point Saturday. A day later, a factory gauge for February signaled contraction for a second month, underscoring the need for looser policy.

The easing saw China join counterparts from Europe to Canada to Southeast Asia in taking steps against deflationary pressures, and will probably be followed by a reduction in the amount of money banks must hold in reserve, according to analysts including at Goldman Sachs Group Inc. Economists expect Premier Li Keqiang will announce a growth target of around 7 percent for 2015, down from 7.5 percent last year.

Bloomberg [1]

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