China's central bank Wednesday cut the benchmark interest rate by 1.08 percentage points, the highest in 11 years, to stimulate the economy battered by the global financial and other economic woes.

It also cut the proportion of money six big commercial banks have to hold as reserve by 1 percentage point to 16 percent. The cut in reserve requirement, which comes into effect from Dec 5, for the smaller banks is 2 percentage points to 14 percent.

The interest rate cut, which takes effect from today, is substantially larger than the previous three this year, 0.27 percentage points each, since mid September.

After the cut, the one-year deposit interest rate will drop from 3.6 to 2.52 percent, and the one-year lending rate will fall from 6.66 to 5.58 percent, said a statement on the People's Bank of China (PBOC) website.

The interest rate cut is the highest since October 1997 when the PBOC slashed the one-year borrowing cost by 1.44 percentage points to support growth and withstand the impact of the Asian financial crisis.