Beijing, China – March 06: Pan Gongsheng, governor of the Popular Banque of China, attended a new conference on the economy for the third session of the 14th popular congress (NPC) on March 6, 2025 in Beijing, China.
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On Wednesday, the Central Bank of China and financial regulators announced stages of sweeping policy, including interest rate reductions, while Beijing increases efforts to strengthen growth in the midst of commercial concerns.
China will reduce the opposite repurchase rates of seven days of 10 base points to 1.4% against 1.5%, said the Governor of the Popular Banque of China, Pan Gongsheng, during a press briefing. This will lower the lending rate, the main policy rate of around 10 base points, said the governor.
The Central Bank will also reduce the reserve requirement rate, which determines the amount of cash banks must hold in the reserves, of 50 base points, releasing an additional liquidity of 1 Billion de Yuan (138.5 billion dollars) on the market.
Lower policy rates Enter into force ThursdayWhile RRR relaxation will be in force on May 15, according to the Xinhua state media.
Officials have also announced measures to support the financing of several key sectors, including technology and real estate, as well as the creation of a release tool of $ 500 billion for consumption and care for the elderly.
The PBOC will reduce mortgage rates within the framework of the country’s housing fund, a housing lender supported by the government, of 25 base points. The prices on five -year loans for new house buyers will be reduced to 2.6% against 2.85%, said the governor.
It will also gradually reduce the amount of species that automotive financing companies must keep in reserves for zero compared to the current 5%.
These measures, however, may have a limited impact on the increase in the demand for interior credit, said Tianchen Xu, the main economist to the intelligence economist, because “the loan was somewhat insensitive to interest rates”.
China is also preparing more measures to support small and medium -sized enterprises and the private sector, which will soon be announced, said Li Yunze, head of the Financial Regulatory Administration, during the Briefing. The government has increased efforts in recent weeks to help companies affected by prices and stimulate employment.
The general ads of stimulus on Wednesday showed that civil servants acted with greater emergency to strengthen the economy and the depreciation pressure on the Chinese Yuan has created a more desirable condition for monetary relaxation, analysts said.
The Yuan offshore Chinese found land to hover near the key threshold of 7.20, after weakening a record hollow of 7.4287 per US dollar this month. He depressed himself modestly to negotiate at 7,2227 by US dollar after the briefing on Wednesday.
“There is no longer any pressure on the RMB to depreciate compared to the dollar. In this context, the PBOC does not have to worry about the risk of reduction in rates and RRR leading to the capital outings and the amortization of the RMB,” said Zhiwei Zhang, president and chief economist at Pinpport Asset Management.
New budget policy measures are missing and can only be unleashed only when decision -makers can see concrete signs of economic deterioration, Zhang said.
Despite the fact that the firepower on several occasions had enough firepower to deploy “if necessary”, Beijing had largely opted for fragmentary recovery measures this year. During a high -level economic policy adjustment in April, the main Chinese decision -makers urged the country to prepare for “Worse scenarios” with sufficient planning.
“Political decision -makers are probably now aware of some of the first data on how the economy is affected by the price shock [still] Salle for more relaxation of policies, “citing the deflationary pressure and moderating growth.
He awaits more than 20 basic points of reduction in interest rates and the reduction of 50 basic points of the RRR this year, while noting that “the next decision can only arrive after the Fed takes up its rate decreases”.
Yields on the public deposit of 10 years of reference in China was little changed to 1.636% on Wednesday, according to LSEG data.
The press conference took place a few hours after Beijing statement This Chinese Deputy Prime Minister, He Lifeng, will keep talks with the US Treasury Secretary Scott Bessent in Switzerland later this week to discuss tariff and trade issues.
It would be the first confirmed commercial talks between the two countries since the American president Donald Trump reduced the prices on Chinese products to an alpine of 145%, which encouraged Beijing
The planned talks could mark a turning point in the current trade war that rocked markets and a crippled trade between the two largest economies in the world.
