China to Give Banks More Leeway to Set Deposit and Loan Rates, PBOC Says

China is expected to further liberalize the way that domestic interest rates are set this year, allowing financial institutions to choose interest rates for their loans and deposits that are more in line with market trends and their own financial goals instead of tying them to the official benchmark rates set by the central bank.

This is the message conveyed after a work conference of the People's Bank of China (PBOC) on Friday, after which it also announced that it would cut the reserve requirement ratio, or the amount of money that banks have to hold in reserves, by one percentage point to ensure that banks had an ample supply of money to lend ahead of the Lunar New Year holidays.