China's Central Bank Cuts Rates, RRR, Injects 1 Trillion Yuan to Boost Economy

Sep 24, 2024, 02:25 AM

China's central bank has announced a series of measures to stimulate the economy amid a deepening slowdown. The People's Bank of China (PBOC) cut the reserve requirement ratio (RRR) by 50 basis points, providing 1 trillion yuan in long-term liquidity and 500 billion yuan in liquidity support to stocks. Additionally, the PBOC reduced the 14-day reverse repo rate by 10 basis points to 1.85% and the 7-day reverse repo rate to 1.5% from 1.7%. The central bank also plans to lower the mortgage rate for existing home loans and reduce down payments for second homes from 25% to 15%. In a rare briefing, PBOC Governor Pan Gongsheng emphasized the need to support the steady recovery of prices and coordinate monetary and fiscal policy. The measures include new monetary policy tools to support the stock market, allowing securities firms, funds, and insurers to tap PBOC funds to buy stocks. Following these announcements, China's stock indices reacted positively, with the Shanghai Composite Index surging 2.4% to jump above 2,850 points and the CSI 300 Index rising 4%. The yield on the 30-year Chinese government bond hit a record low of 2.14%. The FTSE China A50 Index futures surged 1% in early trading. These steps come as Beijing grapples with a crisis in its property market and weak consumer demand, aiming to reach its annual growth target of about 5%.