The biggest interest rate cuts made by the People's Bank of China in 11 years demonstrate the central government's strong determination to curb a further slide of the economy in the context of the world's financial crisis.
    The central bank made a decision last Wednesday to cut 108 basis points respectively on the benchmark one-year lending and deposit interest rate from the following day. It also said as of December 5, it would lower the reserve requirement ratio by 1 percentage point at large banks and 2 percentage points at small and medium-sized financial bodies. Large banks involved include the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, Construction Bank of China, Bank of Communications, and the Postal Savings Bank of China.
    An unexpected move, the 1.08 percentage point cut is the largest since the Asian financial crisis in 1997 and also the fourth in three months. The central bank lowered the interest rate for one-year lending and saving by 27 basis points in each of the previous three times.
    With the Consumer Price Index, a measurement of prices for a range of consumer products, in the US and Japan staying at the current levels, the world's two largest economies in essence hold a negative interest rate policy. However, the Organization for Economic Cooperation and Development (OECD) still urged the two countries to continue to lower their interest rates. According to the multilateral economic group, the Federal Reserve should lower its key interest rate to 0.5 percent from 1.0 percent and the European Central Bank should reduce its key interest rate to 2 percent from 3.25 percent early next year. The organization also called on Japan to maintain its 0.3 percent key interest rate till 2010.