The People’s Bank of China announced on it’s website on Saturday that it will reduce interest rates by 25 basis points, the fourth time it has acted since November, according to this report by the Herald Sun., following a week of sharp loses in the Shanghai Composite index.  As reported by the Wall Street Journal, the China index has plummeted, dropping 7.4% on Friday, and off 19% since hitting a 52-week high on June 12.

The cut affects not only the benchmark interest rate, but the deposit rate as well, and will cut the reserve requirement ratio by 50 basis points.  The decision takes place tomorrow.

The Central Bank also noted turnover in their Monetary Policy Committee, with  new members (Lian Weiliang, Shi Yaobin, Zhang Xiaohui, and Tian Guoli) replacing 4 departing members as well as changes to their “economics and financial affairs expert members”, who have completed their terms.

Larry Hu, China economist at Hacquarie Group Ltd., is quoted by the Wall Street Journal likening the PBOC move to the Federal Reserve easing done in 1987 after “Black Monday“.“The PBOC is trying to stabilize the market with the unprecedented easing moves.”  The latest loosening follows a surprising  perceived tightening by the bank, which had elected not to roll over 300 billion yuan ($48.4 billion) in short term loans to some lenders.