China's Central Bank Announces Major Stimulus, Cuts Rates by 50 Basis Points, Unveils $113 Billion Package

Sep 24, 2024, 05:40 AM

China's central bank, the People's Bank of China (PBOC), has announced a series of significant monetary measures to stimulate the country's economy amid a worsening slowdown. Key actions include cutting the 14-day reverse repo rate by 10 basis points from 1.95% to 1.85%, reducing the seven-day reverse repo rate from 1.7% to 1.5%, and lowering the reserve requirement ratio (RRR) for banks by 50 basis points, which is expected to release approximately CNY 1 trillion in long-term liquidity. Additionally, the PBOC has announced plans to lower rates on existing home mortgages by around 50 basis points and ease rules for second home purchases. Governor Pan Gongsheng also revealed a 500 billion yuan liquidity support for the stock market and a broader package worth 113 billion dollars. These measures are part of a broader effort to support the property market, boost consumer confidence, and meet this year's growth target of around 5%. The announcement has led to a surge in Chinese stock indexes, with the Shanghai Composite Index rising by 4%. Analysts, however, caution that more fiscal support may be necessary to achieve the desired economic outcomes.