China Urges Banks to Cut Interest Rates on Deposits from Other Financial Institutions

According to individuals with knowledge of the matter, Chinese regulators have instructed banks in the country to lower the rates they pay on deposits from other financial institutions in order to free up funds to stimulate the economy. The interest rate self-discipline mechanism, which is overseen by the People's Bank of China, stated that banks should compare their interbank deposit rates to the current 7-day reverse repo rate, which is set at an annual rate of 1.5%. Those who wished to remain anonymous indicated that banks were told not to raise funds significantly above the policy rates of their interbank peers, noting that some lenders are currently paying 1.8% annual or more to attract savings from financial counterparts.