China unveils stimulus package to bolster flagging economy

24th Sep 2024 07:57

(Sharecast News) - China's central bank unveiled a raft of cuts to reserve requirements and lending rates, including for existing home loans, as it tried to stimulate the country's stagnant economy.

The People's Bank of China said it would cut the amount of cash that banks must hold as reserves - known as reserve requirement ratios (RRR) - by 50 basis points.

It will also cut a key policy rate by 0.2 percentage points to 1.5%, while interest rates on existing mortgages will also be reduced by 0.5 percentage points on average, said bank governor Pan Gongsheng.

The world's second-biggest economy reported anaemic growth in the second quarter as it continued to struggle with a prolonged crisis in the property sector.

"The recent rapid development in both domestic and external conditions were the major driving forces behind the PBoC's latest move," said Betty Wang, lead economist at Oxford Economics.

"Domestically, the weaker-than-expected August economic data suggest that the risk of missing this year's growth target has grown."

"Externally, the Fed's outsized rate cuts last week, along with other major central banks' entering easing mode, has eased the depreciation pressure on the Chinese Yuan and provided the PBoC more room to ease monetary policy."

Reporting by Frank Prenesti for Sharecast.com