China's central bank cuts interest rates in growth move

Yuan notes
China's interest rate cuts are aimed at boosting slowing economic growth

The Chinese central bank has cut its benchmark interest rates for the second time in two months, in a bid to arrest slowing economic growth.

Benchmark lending rates will be cut from 6.31% to 6%, while deposit rates will fall from 3.25% to 3%.

The rate cuts will come into force on Friday and closely follow on from the last cuts made on 7 June.

Before these moves, the People's Bank of China had not cut interest rates since 2008.

Commenting on the move, Rupert Armitage, director at Shore Capital, said: "China are cutting rates because they're experiencing a slowdown.

"Everybody's been concerned about the economy, but now they're actually doing something about it."

The central bank's rate cuts come on the back of a gradual liberalisation of China's banking system.

Banks can now compete on the interest rates they offer customers, within a stipulated range.

China's export growth has been hit by a fall in demand from two of its biggest markets, the US and Europe, still struggling with the global debt crisis.

China's economy grew at an annual rate of 8.1% in the first quarter, the slowest pace in almost three years.

It hopes lower interest rates will help boost domestic demand.