Key Takeaways
- China cut its reserve requirement ratio by 50 basis points, releasing 1 trillion yuan.
- The PBOC plans to lower mortgage rates, benefiting 50 million households.
- The minimum down-payment ratio for second-home buyers has been cut to 15%.
China unveiled a series of broad stimulus measures on September 24 to strengthen its weakening economy, stabilize the housing sector, and restore market confidence.
People’s Bank of China (PBOC) Governor Pan Gongsheng announced a 50 basis point cut in the reserve requirement ratio (RRR), which will release 1 trillion yuan ($142.21 billion) in new lending. Pan noted further cuts might follow later this year.
In addition, the PBOC will reduce the seven-day reverse repo rate by 0.2 percentage points and guide mortgage rates down by 0.5 percentage points. These moves are expected to lower costs for about 50 million households, resulting in 150 billion yuan in savings.
The housing market received additional support with a reduction in the minimum down payment for second-home buyers to 15%. The central bank also extended relending loan facilities to help commercial banks finance housing projects and support state-owned companies in acquiring unsold flats.
China’s securities regulator introduced measures to boost the stock market, including a 500 billion yuan funding program for stock investments and supporting share buybacks. These actions sparked optimism in global markets, with stocks and bonds responding positively.
