The Bank of China and Bank of Communications are reportedly set to follow smaller lenders and cut their deposit rate ceilings on Monday.
Bank of China will cut the rates for time deposits of 2-3 year tenors by roughly 10 basis points, according to two banking sources. Bank of Communications will make similar moves, another source said, according to Reuters.
It was not initially clear if other state banks, such as the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB) and Agricultural Bank of China will also cut deposit rates, but the sources said state lenders typically move in tandem on rate moves.
Bank of China and Bank of Communications were not immediately available for comment outside working hours.
‘Need to Counter Covid Impact’
The moves follow a call by a top central bank official on Sunday for China to take steps to soften the economic impact of Covid-19 and boost annual economic growth back above 5%.
Wang Yiming, a member of the Monetary Policy Committee of the People’s Bank of China, told an economic forum effective management of macroeconomic policies was critical in laying a foundation for the country to achieve its national growth target of around 5.5%.
Gross domestic product rose 4.8% in the first quarter from the same period last year.
Beijing should “actively and effectively” expand domestic demand, stabilise the country’s industrial supply chains and manage market expectations, Wang said.
His comments come as Shanghai – China’s most populous city and most important economic hub – battles the country’s biggest Covid outbreak.
Shanghai’s lockdown, which for many residents has lasted over three weeks, has fuelled frustration over access to food and medical care, lost wages, family separation and quarantine conditions.
This has also dragged on the world’s second-largest economy, with factory production disrupted by snarled supply chains and difficulties faced by locked-down residents returning to work.
Under the country’s contentious ‘dynamic zero’ policy to contain the spread of the coronavirus, many cities have been locked down to help contain Covid-19 outbreaks.
Indeed parts of Beijing were reportedly being shut on Sunday to contain the spread of infections in areas where people tested positive.
• Reuters with additional editing by Jim Pollard
The headline on this report was changed and further details added on April 24.
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