China's central bank has cut the benchmark lending interest rates and reserve requirement ratio for commercial banks in a move designed to ensure steady and rapid economic growth.

The People's Bank of China said the benchmark lending rates for one-year yuan-denominated loans will be decreased by 0.27 percentage points on Tuesday. The cut lowers the cost of one-year bank loans to 7.2 percent. It's the first time the lending rate has been slashed since October 2004. The benchmark deposit rates were left unchanged.

The central bank also cut the reserve requirement for all banks, except the country's five biggest banks and the Postal Savings Bank, by 1 percentage point. It's the first time the central bank has lowered the proportion of deposits that lenders must hold in reserve since November 1999. The cut goes into effect on September 25th.

After the adjustment, banks' reserve ratios will stand at 15.5 percent. The People's Bank of china raised the ratio 18 times between July 2006 and June 2008 to mop up cash flooding into the banking system.

The central bank said the reserve requirement ratio will be reduced by 2 percentage points for local financial institutions in areas badly hit by the Wenchuan earthquake in May.

(CCTV September 17, 2008)