Beijing, Oct 23 (IANS): The People's Bank of China (PBOC) on Friday announced a cut in the reserve requirement ratio (RRR) of banks, and benchmark interest rates.

Effective Saturday, the RRR for financial institutions will be slashed by 0.5 percentage points to further reduce the cost of financing, Xinhua news agency reported.

The RRR for qualified financial institutions supporting small and micro businesses and agriculture will be lowered by another 0.5 percentage points, the PBOC announced.

Benchmark interest rates will also be cut to ensure reasonably adequate liquidity in the banking system.

From Saturday, interest rates for one-year lending and deposits will be cut by 0.25 percentage points to 4.35 percent and 1.5 percent respectively, the PBOC said.

Meanwhile, the central bank announced it would remove the upper limit of the floating range of interest rates for deposits in commercial banks and cooperative financial institutions in rural areas, amid efforts to improve the market-oriented formation mechanism of interest rates.

As China's economy continues to slow and global financial markets fluctuate, these moves aim to establish a sound financial environment for restructuring and steady growth of the economy, the PBOC explained.