PBOC to deploy tools to support real economy

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Sun added that the PBOC will also launch two targeted loan facilities at an early date to drive technological innovation and inclusive aged care services.

Along with a reduction in the short-term RRR, the PBOC could also cut the interest rate on its average lending facility, a key interest rate, on Friday, said David Qu, China economist at Bloomberg Economics.

Such high-level monetary support has become necessary as the recent COVID-19 outbreak has dealt a severe blow to economic activity, with Shanghai bearing the brunt, Qu said.

Wen Bin, chief researcher at China Minsheng Bank, said he now sees less possibility of an interest rate cut this month as the PBOC is set to opt for the high-profile move. a reduction in the RRR.

The prime lending rate, a market-based benchmark lending rate that will be unveiled on April 20, could fall further as a reduction in the RRR would reduce funding costs for financial institutions, Wen said.

The central bank also said at the press conference that it would better meet reasonable housing demand from homebuyers and help local governments stabilize local housing markets.

Since early March, in the face of weaker demand, banks in more than 100 cities have cut mortgage rates, making market-oriented adjustments tailored to local situations, according to the PBOC.

Bloomberg Economics’ Qu said the central government may continue to keep the regulatory framework for the real estate sector unchanged, but allow local governments to ease local real estate restrictions to maintain stability in the real estate market and prevent a sharp downturn in the sector. .

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