China announced on Wednesday that it will cut one of its key interest rates by 0.1 percentage points and also lower the reserve requirement ratio for banks in order to boost credit, as part of steps aimed at revitalizing an economy affected by slowing consumption and the effects of the trade war with the United States.
اضافة اعلان
Governor of the People's Bank of China, Pan Gongsheng, said during a press conference that "the reserve requirement ratio will be reduced by 0.5 percentage points."
The reserve requirement is the portion of deposits that commercial banks must keep in their vaults. Any reduction is expected to encourage banks to lend more.
He added that the interest rate on seven-day reverse repurchase agreements (reverse repo) would also be lowered from 1.5% to 1.4%.
The governor clarified that these decisions are particularly aimed at "supporting technological innovation" and "stimulating consumption."
China, the world’s second-largest economic power, is struggling to fully recover from the COVID-19 pandemic and is also facing weak domestic demand and an ongoing crisis in the real estate sector.
In this context, the central bank governor also announced that China will lower borrowing rates for first-time homebuyers.
He explained that the interest rate on mortgage loans for those buying a home for the first time, with loans exceeding five years, will be reduced from 2.85% to 2.6%.
