The People's Bank of China (PBOC) cut its main interest rate by 25 basis points to 4.6 per cent after two days of stock market mayhem that had sent shock-waves across the globe.
This is the fifth interest rate cut in the last 12 months by the Chinese central bank. PBOC has also reduced one-year benchmark deposit rates by 25 basis points, and will lower the reserve requirement ratio (RRR) by 50 basis points to 18 per cent for big banks, effective Sept 6.
Post the action by the Chinese central bank, European stock markets have bounced back and are recovering losses. Wall Street is likely to rally too, after the Dow shed 588 points yesterday.