Reuters exclusively reported that members of China’s “interest rate self-regulatory mechanism,” mostly banks, met this month and were urged to reduce deposit rates as a way to guide the country’s savings into spending and more productive investments.
China guides banks to further cut deposit rates
Household savings surged 9.9 trillion yuan for the first quarter, after record growth of 17.8 trillion yuan last year. Net interest margins, a key measure of banks’ profitability, hit a record low of just 1.91% during the fourth quarter of 2022. With margins so low, lower deposit rates will to aid the economy.