MNI BRIEF: PBOC Announces Cut to Key Policy Rate And RRR
The PBOC has revealed significant easing.
The People’s Bank of China will cut its 7-day reverse repo rate by 20 basis points to 1.5% and the reserve requirement rate by 50bp to support the economy, Governor Pan Gongsheng told reporters on Tuesday.
The 7-day rate cut will also guide down the Loan Prime Rate by 20bp and MLF by 30bp, representing the first reduction since July when the Bank reduced the key rate by 10bp, Pan said. The RRR cut will unlock CNY1 trillion of long-term liquidity into the interbank market, and is also the first cut since February when the Bank reduced the rate 50bp, he continued.
The Bank plans to cut the RRR another 25bp-50bp later this year if necessary, he said, noting it will maintain accommodative policy to strengthen and support the economy.
The Bank will lower interest rates on existing mortgages and standardise the minimum down-payment ratios for home loans, he added. Banks will be guided to reduce interest rates on existing mortgages to levels close to those of newly issued loans, with the average expected reduction about 50bp. The minimum down-payment ratio for first and second homes will be unified, with the national minimum down payment for second homes lowered to 15% from 25%.