Room for interest rate cuts "limited" for China: central bank official

Yi Gang, vice governor of China's

central bank, said Tuesday that China still has room to cut interest

rates, but such room is "quite limited".(Photo: News.cn)
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BEIJING, March 10 (Chinese media) -- Yi Gang, vice governor

of China's central bank, said Tuesday that China still has room to cut interest

rates, but such room is "quite limited".

"China still has room to cut interest rates, but not

a lot," Yi told Chinese media.

"The room for cuts is quite limited, because a zero

interest rate is not the best choice for China at the moment," he said.

The People's Bank of China, the country's central

bank, has cut interest rates five times and reduced required reserve ratio for

commercial banks four times since last September.

The one-year benchmark deposit rate now stands at

2.25 percent.

Yi pointed out interest rates of China and the United

States are actually almost the same.

The 12-month deposit rate in the U.S. stands at

around 2 percent, although its key interest rate, or an inter-bank rate, is zero

to 0.25, he explained.

The equivalent inter-bank rate in China is at around

0.8 percent, he added.

China's current rate still has room for manoeuvre, Yi

said, but if the interest rate falls to zero, there will be no more room for

using interest rates to deal with any further world economic downturn.

Su Ning, also vice governor of the central bank, told

Chinese media on Monday that China still has plenty of space to manoeuvre in its

monetary policy.

Su said the room for further adjustment is "smaller

but still exists."

"There's a quite a lot of room for cutting the bank's

reserve requirement ratio," he added.