China’s central bank has announced new measures to help its struggling economy, as explained by the People’s Bank of China (PBOC) Governor Pan Gongsheng at a rare press conference. The bank plans to lower borrowing costs and let banks lend more money.
This announcement comes after disappointing economic data raised concerns that China might not reach its growth target of 5% this year .
In his speech, Mr. Pan revealed that the PBOC would reduce the reserve requirement ratios (RRR), which is the amount of cash banks must keep in reserve.
This initial cut of half a percentage point is expected to free up around 1 trillion yuan (about $142 billion) for lending. Mr. Pan also hinted that there could be further cuts later in the year .
To address challenges in China’s troubled property market, the PBOC will reduce interest rates for existing mortgages and lower the minimum down payment for homes to 15%.
The real estate sector has faced serious problems since 2021, with many developers failing and leaving numerous homes unsold and projects unfinished .
These moves by the PBOC follow a similar decision by the US Federal Reserve to lower interest rates for the first time in over four years, which has been a larger cut than usual .
The positive response to the news was evident as stock markets in Asia surged, with major indexes in Shanghai and Hong Kong rising by over 4% .
This shows how crucial these measures are for boosting investor confidence and stabilizing the economy.
Credit : BBC
https://www.bbc.com/news/articles/cjd5xlv03jxo