The People's Bank of China (PBOC) announced a reduction in the reserve requirement ratio (RRR) and interest rates, lowering the deposit reserve ratio by 0.5% and reducing the policy interest rate by 0.1%.
On the 7th, PBOC Governor Pan Gongsheng announced at a press conference on "A Package of Financial Policies to Support Stabilizing the Market and Expectations" that the RRR would be cut by 0.5%, providing approximately 1 trillion RMB (586.347 billion MYR) of long-term liquidity to the market, along with a reduction in the policy interest rate by 0.1%.
Pan Gongsheng also announced a reduction in the interest rate for individual housing provident fund loans by 0.25%.
He stated that the next steps for the PBOC will be to continue implementing a moderately loose monetary policy, adjusting according to domestic and international economic and financial conditions, and working in coordination with fiscal policies to promote high-quality economic development.
Pan Gongsheng explained that there are a few key points to the moderately loose monetary policy: firstly, liquidity is abundant, social financing conditions are relatively loose, including the reasonable growth of macro-financial aggregates such as social financing scale and broad money supply (M2), and the comprehensive social financing cost is relatively low. Secondly, policy implementation requires situational assessments, comprehensively evaluating domestic and international economic and financial conditions and financial market operations, and dynamically adjusting using various monetary policy tools.
Pan Gongsheng said that thirdly, the orientation of monetary policy describes a state; in recent years, the PBOC has repeatedly cut RRR and interest rates, indicating that the stance of monetary policy is supportive, and the aggregate is quite loose.