After US, China reduces interest rates to bolster sluggish economy
The People's Bank of China (PBOC) has implemented a series of measures aimed at facilitating easier borrowing for households and businesses. This move is seen as the most significant effort by China in recent months to stimulate economic growth, prevent a housing market collapse, and halt a general decrease in prices. The PBOC has lowered short-term interest rates and existing mortgage rates, reduced minimum down payments for home purchases, and permitted banks to lend a larger percentage of their assets.
PBOC's governor announces readiness to further ease lending
Pan Gongsheng, the governor of the PBOC, announced at a rare press conference that his institution is prepared to allow banks even more lending flexibility if necessary. This announcement comes just days after the US Federal Reserve reduced its short-term rates by half a percentage point. In response, the Chinese central bank has lowered its benchmark seven-day interest rate from 1.7% to 1.5%.
PBOC allows commercial banks to reduce reserve assets
The PBOC has also given commercial banks the green light to decrease their reserve assets by half a percentage point. This move is expected to enable banks to lend an additional $140 billion to businesses and households. However, despite these measures, there are concerns that they may not be sufficient on their own to reverse China's economic slowdown.
