Sou Hu Cai Jing·2025-05-20 10:11Core Viewpoint - The recent reduction in deposit rates by major Chinese banks marks the beginning of a new era where the one-year fixed deposit rate has fallen below 1%, signaling a significant shift in monetary policy aimed at stimulating economic growth [1][2][4]. Group 1: Impact on the Banking Sector - The reduction in deposit rates is a direct result of the central bank's efforts to lower funding costs for banks, which in turn allows them to reduce loan rates, thereby decreasing the overall financing costs for society [2][4]. - This move is part of a broader trend initiated by state-owned banks, reflecting a systematic approach to monetary policy adjustments that began in July 2024 [1][2]. Group 2: Economic Implications - Lower deposit rates are expected to redirect funds from savings to investment and consumption, promoting better allocation of resources and potentially leading to increased employment opportunities and economic growth [4][5]. - The decrease in financing costs is particularly beneficial for small and medium-sized enterprises (SMEs), enabling them to access loans at lower rates for technological development and market expansion [4][5]. Group 3: Effects on Savers - The drop in the one-year fixed deposit rate to 0.95% means that a deposit of 10,000 yuan will yield less than 100 yuan in interest over a year, impacting the financial planning of savers, especially those relying on interest income for retirement [5]. - There is a potential for further declines in deposit rates, which could lead to zero interest rates or even management fees on deposits, posing challenges for conservative investors and retirees [5].