BEIJING: China’s central bank governor announced on Oct 18 that the reserve requirement ratio for banks might be cut by 0.25% to 0.50% by year-end, depending on liquidity needs. This suggests further policy easing could happen.
The seven-day reverse repo rate was recently lowered by 0.20%, and the medium-term lending rate by 0.30%, according to the People’s Bank of China (PBOC) Governor Pan Gongsheng at a financial forum.
On Oct 21, the Loan Prime Rate (LPR) is expected to drop by 0.20% to 0.25%, as reported by Xinhua.
Pan has indicated that more stimulus is possible to support the struggling economy, following recent measures to stabilize the housing market and boost capital market confidence.
During the forum, Pan cautioned against illegal fund flow into the stock market.
In September, the PBOC introduced two new tools to aid markets, including a swap program to ease access to funds for stock purchases and affordable loans for banks to help companies buy back shares.
Pan emphasized that these measures are market-based and not direct financial support from the central bank, stressing that loan funds must not illegally enter the stock market.
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