Chinas central bank unveiled Tuesday a broad package of monetary stimulus and property market measures to revive the economy which is grappling with strong deflationary pressures and in danger of missing this year's growth target.
Peoples Bank of China governor Pan Gongsheng told a news conference in Beijing that the central bank will in the near future cut the amount of cash that banks must hold as reserves - known as reserve requirement ratios (RRR) - by 50 basis points (bps).
That would free up about 1 trillion yuan ($141.93 billion) for new lending, though credit demand has been exceedingly weak.
Depending on the market liquidity situation later this year, the RRR may be further lowered by 0.25-0.5 percentage points, Pan said.
The People's Bank of China will also cut the seven-day repo rate, its new benchmark, by 0.2 percentage points to 1.5%. The interest rate on the medium-term lending facility will drop by about 30 basis points, and loan prime rates by 20-25 bps.
The property market support package included a 50 bps reduction on average interest rates for existing mortgages, and a reduction of the minimum downpayment requirement to 15% on all types of homes, among other measures.
Pan said further monetary policy easing, including another RRR cut, was on the cards later this year.
Chinas economy grew much slower than expected in the second quarter, weighed down by a protracted property crisis and consumers worries about job security. August economic data broadly missed expectations, adding urgency for policymakers to roll out more support.
The government is aiming for economic growth of around 5.0% for 2024, but some investment banks have recently lowered their forecasts for Chinas growth rate this year.
Stocks rose and the onshore yuan opened at its strongest level since May 2023 on Tuesdays news.
The yield on Chinas benchmark 10-year government bond fell four basis points to 2.036%, close to the record low hit last week, while 30-year treasury futures for December delivery rose to a record high.
Source: Qatar News Agency