The People's Bank of China said on Wednesday evening that the cost of one-year bank loans will fall to 6.93 percent from 7.20 percent. While the benchmark one-year deposit rate will fall to 3.87 percent from 4.14 percent.

The PBOC also cut the reserve requirement for all banks by half a percentage point. That lowers the requirement for big banks to 17.0 percent and for other banks to 16 percent.

The central bank said the cut in lending rates will take effect on Thursday. The cut in the reserve requirements will go into effect next Wednesday.

The central bank last cut lending rates and smaller banks' reserve requirements on September 15, less than one month ago.

China's central bank was acting in coordination with central banks around the world. The move aims to boost the domestic economy amid worries over the global financial crisis.

In another step aimed at encouraging consumption in the world's fourth-largest economy, China is also temporarily scrapping the 5 percent withholding tax levied on interest income. Beijing last cut the tax rate from 20 percent in August 2007.

(CCTV October 9, 2008)