China Announces More Support Measures for the Economy

The People's Bank of China (PBoC) introduced several measures to boost the economy amid concerns that the official growth target of around 5% might be out of reach due to recent weak data.

Governor Pan Gongsheng said in a media briefing today that the central bank will cut the reserve requirement ratio (RRR) by 50bps, which will inject CNY 1 trillion into the financial system, with the possibility of another reduction of 0.25 to 0.5 ppts later this year.

In addition, the PBoC will lower the seven-day reverse repo rate by 20bps to 1.5%, aiming to reduce short-term borrowing costs for banks.

This move is accompanied by a 30bps reduction in borrowing costs of the medium-term lending facility.

Mortgage rates will also be trimmed, with an expected average drop of 50bps, and the minimum down payment for second homes will be cut to 15% from 25%.

Pan did not specify when the moves will take effect.

Tuesday's action came after the US Fed started its monetary easing cycle with a large rate cut.