Central Bank of China

PRESS RELEASE Release Date: September 18, 2001




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Monetary Policy Decisions of the Board Meeting

(September 18, 2001)

The Board of the Central Bank of China (CBC) today decided to lower the discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral each by 50 basis points, from 3.25%, 3.625% and 5.5% to 2.75%, 3.125% and 5.0%, respectively, effective from September 19.

For the first eight months of this year, CPI and core CPI inflation were 0.30% and 0.42%, respectively. CPI for the year as a whole is forecast to be 0.41% according to the Directorate-General of Budget, Accounting and Statistics under the Cabinet. Domestic prices are expected to remain stable throughout the year.

In the real sector, the economy has been slowing and the unemployment rate has been rising continuously. Following the terrorist attacks on the US, the external sector may worsen. It is, therefore necessary to promote both private investment and consumption. In addition, in accordance with the economic slowdown, funding conditions in the banking sector were easy, and market interest rates trended downwards.

Today's decision is made to boost the sagging economic sentiment and to reflect the downward trend of market interest rates, with the prerequisite of price stability.