BEIJING: China’s central bank governor announced on Friday (Oct 18) that the reserve requirement ratio for banks may be reduced by 0.25% to 0.50% by the end of the year, depending on liquidity. This indicates a potential for further policy easing.
The seven-day reverse repurchase rate has decreased by 0.20% and the medium-term lending rate by 0.30%, according to People’s Bank of China (PBOC) Governor Pan Gongsheng.
On Oct 21, the Loan Prime Rate (LPR) is expected to drop by 0.20% to 0.25%, as reported by the official Xinhua news agency.
Pan has previously mentioned additional stimulus measures to support the struggling economy, following steps taken in late September to stabilize the housing market.
During the forum, Pan also cautioned against illegal fund movements into the stock market.
The PBOC introduced two initiatives in September to assist markets: a swap program for easier funding access for stock purchases, and low-interest loans to help banks fund company buybacks.
Pan emphasized that these measures are market-driven and that funds from loans must not improperly enter the stock market.
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