Importance of savings stressed

China should cut bank savings rates at a slower pace than borrowing costs to sustain incomes in the nation, Tarhan Feyzioglu, resident representative for the International Monetary Fund in China, said yesterday.

"As China's monetary loosening is taking place, we would like to see lending rates decline faster than deposit rates," Feyzioglu told a financial conference in Beijing.

"Deposit rates are important for households, and financial incomes in China are already much lower than other countries."

China's central bank has cut benchmark lending rates three times and deposit rates twice over the past two months after the economy grew at the slowest pace in five years between July and September.

The yield on China's three-month central bank bills tumbled 80 basis points last Thursday, the most this year, as investors bet on more reductions, Bloomberg News said.

The central bank imposes a ceiling on the rate of interest lenders can offer on deposits. That limit should be gradually removed to help smaller lenders compete, Feyzioglu said.