Central Bank Shows It Is Concerned about Stock Market

In an unusual step on June 27, the People's Bank of China cut its lending rate and reserve-requirement ratio (RRR) for commercial banks. The central bank announced it would lower its benchmark lending rate by 25 basis points to 2 percent and the RRR for certain banks by 0.5 percentage points through a targeted rate cut instead of a universal one.

Officially, the central bank said the synchronized moves were aimed at "maintaining growth and lowering the borrowing costs via structural adjustment," but their timing made them appear more like an effort to support the stock market.