The People's Bank of China (PBOC), the central bank, announced Thursday it would cut the benchmark interest rate for deposits and loans by 25 basis points beginning June 8.

This was the first time that China's central bank cut the benchmark rates since December 2008, after which it has raised the rates for five times to drain liquidity.

After the cut, the one-year deposit interest rate will fall to 3.25 percent while that of the one-year loan interest rate will be lowered to 6.31 percent.

The upper limit of the floating band of deposit rates will be adjusted to 1.1 times the benchmark while banks are allowed to offer 20 percent discount to borrowers.

The latest move came as China's slower-than-expected economy had raised concerns over an abrupt brake for the world's second largest economy.

China's GDP slowed to a nearly three-year low of 8.1 percent in the first quarter and key economic indicators for April continue to suggest downward risks.

(Xinhua News Agency June 7, 2012)