Written by Lisa Murimi
China’s central bank, the People’s Bank of China (PBOC), has announced a major economic stimulus package aimed at revitalizing the country’s struggling economy.Â
Governor Pan Gongsheng outlined measures to lower borrowing costs and allow banks to increase lending, in response to weakening economic data that suggests China may fall short of its 5% growth target this year.
At a rare joint news conference with other financial regulators, Pan revealed plans to reduce the reserve requirement ratio (RRR) by 0.5 percentage points.
This move is expected to release approximately 1 trillion yuan ($142 billion) into the economy. He also indicated a potential further reduction later in the year.
Additionally, the PBOC aims to bolster the faltering real estate sector by lowering interest rates on existing mortgages and cutting minimum down payments on homes to 15%.
China’s property market has faced significant turmoil since 2021, with several developers collapsing and numerous unfinished projects.
The announcement sparked a rally in Asian stock markets, with indexes in Shanghai and Hong Kong rising by over 3%.
The measures came shortly after the U.S. Federal Reserve also made a significant interest rate cut, signaling a global response to economic slowdowns.
