3. Stocks rally

The rate cut helps improve market liquidity, which can lead to a positive momentum in the stock market. As a result, A shares rallied on Monday with benchmark Shanghai Composite Index up 1.85 percent and Shenzhen Component Index up 2.95 percent.

The intention is to lower market interest rates and private financing costs to help alleviate problems facing many enterprises, the central bank said in a separate statement after the interest rate announcement.

A screenshot of the trend of Shanghai Composite Index on November 24, 2014. [Photo/sina.com.cn]