China unveiled sweeping policy measures on Wednesday, including interest rate cuts, as the country intensifies efforts to bolster economic growth amid mounting trade worries.
The People’s Bank of China (PBOC) will cut the seven-day reverse repurchase rate by 10 basis points to 1.4 per cent from 1.5 per cent, Governor Pan Gongsheng announced during a press briefing. This move will bring down the loan prime rate, the main policy rate, by around 10 basis points, the governor said.
The central bank will also lower the reserve requirement ratio, which determines the amount of cash banks must hold in reserves, by 50 basis points, unleashing additional liquidity of 1000 billion yuan ($138.6 billion) to the market.
Additionally, the PBOC will reduce the mortgage rates under the nation’s housing provident fund, a government-backed housing lender, by 25 basis points. Rates on five-year loans for first-time homebuyers will be trimmed to 2.6 per cent from 2.85 per cent, the governor said.
Pan’s announcement came hours after China revealed it would hold its first trade talks this weekend with US officials since Donald Trump unleashed a 145 per cent tariff on most Chinese goods, reported Bloomberg. The governor spoke alongside China Securities Regulatory Commission Chairman Wu Qing and the head of the National Financial Regulatory Administration, Li Yunze.
“The US abuses of tariffs have severely disrupted global economic and trade orders,” said the CSRC’s Wu. “The production and operation of listed companies have inevitably been affected directly or indirectly.”
(With WAM & Bloomberg)
