Governor of People’s Bank of China Pan Gongsheng
The People’s Bank of China (PBC), the central bank, announced on Wednesday a new package of monetary policies to reinforce broad market expectations, and the measures includes lowering the reserve requirement ratio (RRR) for financial institutions by 0.5 percentage points and cutting the benchmark interest rates by 0.1 percentage points.
To “implement the spirit of the meeting of the Political Bureau of the Communist Party of China Central Committee on April 25” and better tap a largely accommodative monetary policy to fire up economic growth, China’s central bank will strengthen macro-economic adjustments by rolling out a new package of monetary policies, which includes 10 detailed policies, PBC Governor Pan Gongsheng said at a press conference in Beijing on Wednesday.
Among the measures, a RRR cut of 0.5 percentage point is expected to inject long-term liquidity of about 1 trillion yuan ($138.56 billion) to the financial market. Meanwhile, the seven-day reverse repo rate, another main policy rate, will be lowered from current 1.5 percent to 1.4 percent, which will drive loan prime rate (LPR) down by 0.1 percentage point, Pan said.
And, the monetary authorities will improve the reserve requirement system, and will reduce the RRR for auto financing firms and financial leasing firms in the country from current 5 percent to zero, Pan noted.
Pan said that a 0.25-percentage point cut in individual housing provident fund loan rates, with the rate for first-home loans of over five years being lowered from 2.85 percent to 2.6 percent. Rates for other maturities will be adjusted accordingly.
In addition, the central bank governor also announced to increase the re-lending facility of up to 800 billion yuan to beef up the country’s scientific and technological innovation, and another 500-billion-yuan relending facility to support domestic consumer spending and elderly care, to help low-cost funding for key consumption sectors.
