China launches series of drastic measures to restore economy

Governor of the People's Bank of China Phan Cong Thang speaks at a press conference on September 24.

China has just announced a series of important policies to boost the economy , including cutting current home mortgage interest rates and reserve requirement ratios, alongside plans to deploy new tools to support the stock market.

Chinese stocks and bonds rose and Asian shares hit a 2-1/2-year high, as People's Bank of China Governor Pan Gongsheng announced plans and pumped more liquidity into the economy, according to Reuters.

Xinhua quoted Mr. Phan speaking at a press conference on September 24 as saying that China will cut the reserve requirement ratio (RRR) by 0.5 percentage points in the near future, providing about 1,000 billion yuan in long-term liquidity to the financial market.

Depending on the liquidity situation in the market, RRR could be lowered by another 0.25 to 0.5 percentage points this year, according to Mr. Phan.

The People's Bank of China will also cut the 7-day repurchase (repo) rate by 0.2 percentage points to 1.5%. The medium-term lending facility (PBS) rate will be cut by about 30 basis points and the loan prime rate by 20-25 basis points.

The housing support package includes a 50 basis point cut in average interest rates for existing mortgages and a reduction in minimum down payment requirements to 15% for all types of homes, among other measures.

For the stock market, China's central bank will create new monetary policy tools to support stable development.

The central bank will set up a swap program for securities, fund and insurance companies to obtain liquidity from the central bank through collateralizing assets.

This program will significantly enhance the companies' ability to raise capital and increase their shareholdings.

The bank will also create a special re-lending facility to guide banks to provide loans to listed companies and their major shareholders for acquisitions and increased shareholdings.

Source: https://thanhnien.vn/trung-quoc-dua-ra-loat-bien-phap-manh-tay-nham-khoi-phuc-kinh-te-185240924111728016.htm