CHINA’S central bank unleashed a blitz of policy support for the economy, as policymakers make their broadest push so far to hit this year’s annual growth target of about 5 per cent.
People’s Bank of China (PBOC) governor Pan Gongsheng announced a series of stimulus measures at a rare briefing on Tuesday (Sep 24) in Beijing, including moves to boost banks’ lending to consumers and corporates, and a cut to its key short-term interest rate. China will also lower the mortgage rate for existing housing loans.
“Monetary policy easing come bolder than expected, with both rate cuts and RRR (reserve requirement ratio) cuts announcing at the same time,” said Becky Liu, head of China macro strategy at Standard Chartered. “We see room for bolder easing ahead in the coming quarters, following the Fed’s outsized rate cuts.”
The offshore yuan weakened 0.1 per cent as the PBOC announced the cuts. China’s 10-year government bond yields declined to 2 per cent, a fresh record low.
The RRR, or the amount of cash banks must keep in reserve, will be lowered by 0.5 percentage points. That will unleash one trillion yuan (S$183 billion) in liquidity, Pan said. China may also cut the RRR further this year by another 0.25 to 0.5 percentage points at the appropriate time, he added.
The seven-day reverse repurchase rate will be lowered to 1.5 per cent from 1.7 per cent.
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President Xi Jinping’s government has enacted piecemeal rate cuts that have so far failed to arrest a slowdown in the world’s No 2 economy, with growth weakening further after grinding to its worst pace in five quarters. That deterioration is testing the Chinese leadership’s tolerance for missing its
