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MNI China Press Digest October 18: PBOC, Growth, Mortgage Rate

MNI (Singapore)
MNI (Beijing)

The following lists highlights from Chinese press reports on Tuesday:

  • The People’s Bank of China’s roll-over of a maturing CNY500 billion medium-term lending facilities with the same amount on Monday will provide commercial banks with ample liquidity to increase lending in Q4 and signals increased support for the real economy, China Securities Journal reported citing analysts. The PBOC had renewed MLFs but with a reduced amount in August and September, the newspaper said. Considering the large amount of MLFs due to mature in November and December, the PBOC may implement structural monetary tools and cut the reserve requirement ratio slightly to fill the liquidity gap, the newspaper said citing Wen Bin, chief economist of Minsheng Bank.
  • China should switch its economic growth focus to a greater reliance on the domestic market before weakening external demand reaches an inflection point, wrote Guan Tao, a former foreign exchange official and now global chief economist of BOC Securities, in a blog post. China should make good use of its fiscal and monetary policy space to boost consumption and investment to consolidate the economic recovery, said Guan. Maintaining the country's leading position in the world's economic recovery is an important foundation for supporting the strength of the yuan, said Guan.
  • Several Chinese cities including Tianjin and Shijiazhuang have seen the mortgage rate for first-home buyers drop below 4% in October after the People’s Bank of China allowed eligible cities with fast falling home prices to let rates fall below the floor of 4.1%, the Securities Daily reported. There is likely to be a sharper reduction in mortgage rates across the country, including first- and second-tier cities, as the five-year Loan Prime Rate - which lenders base their mortgage rates on - will decline 15-30 bps in Q4, the newspaper said citing Wang Qing, chief analyst with Golden Credit Rating. He said there was room for a lower LPR following a sharp drop in deposit rates even if the PBOC keeps steady the rate on its Medium-term Lending Facility, which feeds into the LPR.

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