(MENAFN– The Rio Times) The People’s Bank of China (PBoC) has lowered interest rates to boost the economy. On Monday, the central bank cut the Loan Prime Rates (LPRs) by 0.25 percentage points, bringing the one-year rate to 3.1% and the five-year rate to 3.6%. These rates guide banks’ lending practices.
China’s economy faces ongoing issues, despite stimulus measures since July 2024. The PBoC’s recent actions aim to revive growth, with a significant stimulus package introduced in September, including a 50 basis point reduction in reserve requirements and a key interest rate cut.
The PBoC also lowered mortgage rates on existing homes by about 0.5 percentage points to support the property sector. The government announced a RMB 300 billion ($42.52 billion) loan initiative for state-owned enterprises to buy unsold homes and reduced the down payment ratio for second homes to 15%.
To stimulate the stock market, the government provided 800 billion yuan ($86 billion) for share buybacks and allowed non-bank institutions to invest in stocks. Despite these efforts, China’s economy is still struggling, with low consumer confidence and a weakening property market.
The total estimated size of China’s 2024 stimulus package is about 7.5 trillion yuan ($1.07 trillion), or 6% of GDP, potentially the largest in history. However, experts argue that structural solutions are needed, rather than short-term fixes.
As winter approaches, concerns grow that China’s economy may remain sluggish, potentially requiring further easing. While the PBoC is committed to economic recovery through monetary policy, the effectiveness of these measures remains to be seen as China’s growth hits its slowest pace in six quarters at 4.6%.
China Slashes Key Interest Rates to Revive Economic Growth
`
