In a bid to revive its flagging economy, China’s central bank has unveiled a major package of measures including plans to lower borrowing costs and allow banks to increase their lending.
People’s Bank of China (PBOC) Governor Pan Gongsheng announced the move, speaking at a rare news conference alongside officials from two other financial regulators. Pan said the central bank would cut the amount of cash which banks have to hold in reserve — known as reserve requirement ratios (RRR).
The move follows a series of disappointing data which has increased expectations in recent months that the world’s second-largest economy will miss its own 5% growth target this year. Stock markets in Asia jumped after comments from the governor as he added that another cut may be made later in the year.
Another set of measures aimed to boost China’s struggling property market include cutting interest rates for existing mortgages and lowering minimum down payments on all types of homes to 15%.
China’s ailing economy has made headlines recently. A real estate collapse has made consumers cautious and spooked businesses, as China confronts a crisis unlike any other since it opened its economy to the world.
It is important to note that the PBOC’s new economic stimulus measures come just days after the U.S. Federal Reserve lowered interest rates for the first time in more than four years with a bigger than usual cut.
