CHINA’S central bank cut interest rates and lowered the amount of reserves banks must hold for the second time in two months yesterday, ratcheting up support for a stuttering economy and a plunging stock market.

    The move came as Chinese stock indexes nosedived more than 7 percent yesterday to hit troughs not seen since December, and after shares had plunged over 8 percent Monday.

    The latest policy easing also followed a shock devaluation in the yuan two weeks ago.

    “Frankly, this shows a bit of panic in my mind,” Andrew Polk, resident economist at the Conference Board in Beijing, said.

    “This is a big-bang move,” he said. “It’s meant to address some real issues and also prevailing market sentiment over the past two days.”

    The People’s Bank of China (PBOC) said on its website that it is lowering the one-year benchmark bank lending rate by 25 basis points to 4.6 percent. The rate cut, the fifth since November, is effective from today.

    One-year benchmark deposit rates are also reduced by 25 basis points, while the ceiling for deposit rates with tenures of over a year is scrapped to further free up China’s interest rate market.

    At the same time, the PBOC said it is also lowering the reserve requirement ratio by 50 basis points to 18 percent for most big banks. The change will be effective Sept. 6.

    China’s currency devaluation and a near-collapse in its stock markets in early summer have sparked fears that the world’s second-largest economy is at risk of a hard landing.

    French President Francois Hollande said during a visit to Berlin that he was upbeat about the recovery of the Chinese financial market, arguing “the world’s second main economy” enjoyed “important resources and will find answers within them.”

    The global economy was “strong enough” so that its growth “is not only related to the situation in China,” he said.

    The Chinese economy will pick up its pace in the second half of 2015 due to expected pro-growth measures, said Qu Hongbin, chief China economist of London-based bank HSBC.

    Yao Yudong, head of the People’s Bank of China’s Research Institute of Finance, said the expected U.S. Fed rate hike next month had been the “trigger” for the wild market swings. He said the Fed should remain patient before the U.S. inflation reaches 2 percent.

    Earlier, analysts said the devaluation of renminbi triggered the plunge and the weakening of bulk commodities and currencies in other countries.

    Michael Bloomberg, founder of the world’s leading financial information provider Bloomberg L.P. and former New York City mayor, did not agree that there is an economic slowdown in China during an interview with Xinhua News Agency last week.

    “By any rational basis compared to any place else in the world, China is still spectacular, there isn’t a slowdown and it doesn’t impact our business,” he said. Bloomberg’s business has grown in China and it recently hired about 150 people on the Chinese mainland. (Xinhua)