China’s central bank cut benchmark interest rates for the sixth time this year in a bid to support an economy that is forecast to grow at its slowest annual rate in 25 years.

The move comes a day after the European Central Bank indicated it would extend its quantitative easing programme and cut its deposit rate in a bid to boost the euro zone’s sluggish recovery.The move drove bond yields down, with Irish two-year interest rates joining many others by falling below zero – to -0.2 per cent – and 10-year yields at just over 1 per cent.

The People’s Bank of China’s actions, combined with today’s ECB announcement and market doubts over the US Federal Reserve’s commitment to raise interest rates this year, highlight a wider nervousness in official circles over the health of the global economy.

Expectations for global growth have already been revised down to 3.1 per cent in 2015, the lowest International Monetary Fund forecast since 2009, and analysts are concerned that prospects for next year are also dimming.

The PBoC said it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.35 per cent and the one-year benchmark deposit rate to 1.5 per cent – its lowest on record – from 1.75 per cent.

The central bank also cut the share of customer deposits banks must hold in reserve, injecting Rmb560bn (€81bn) of cash into the banking system to counteract the cash drain from capital outflows in recent months. – Copyright The Financial Times Limited 2015