BEIJING, Sept 24 (Reuters) - China's central bank announced broad monetary stimulus and property market support measures to revive an economy facing strong deflationary pressures and risks of missing its growth target for the year. The measures come in response to disappointing economic data and aim to restore confidence in the world's second-largest economy.
Chinese stocks and bonds rallied after Governor Pan Gongsheng outlined plans to lower borrowing costs and increase liquidity. The People's Bank of China will cut the reserve requirement ratios (RRR) by 50 basis points, freeing up approximately 1 trillion yuan ($141.93 billion) for new lending. Additionally, the central bank will reduce the seven-day repo rate to 1.5% and lower loan prime rates.
The property market support includes a 50 basis points reduction on average interest rates for existing mortgages and a decrease in the minimum downpayment requirement to 15% for all types of homes. The property sector has been in decline since 2021, with many developers defaulting and leaving behind unsold apartments. Despite previous measures to stimulate demand, home prices continue to fall, significantly impacting consumer confidence.
August economic data fell short of expectations, prompting urgent calls for more support from policymakers. Analysts predict additional fiscal measures in the coming weeks to help achieve the government's growth target of around 5.0% for the year. The latest policy announcements follow a rate cut by the U.S. Federal Reserve, which may provide the People's Bank of China more room to ease monetary conditions without pressuring the yuan.
Reporting by Beijing newsroom; Editing by Himani Sarkar, Shri Navaratnam and Kim Coghill. Source: Reuters, Date: 2024-09-24.