People's Bank of China lowers its rates

Surprisingly for many external observers, just after the 3rd Plenum KC KPCh (chin. 中国共产党第三次中央委员会全体会议), deciding on the direction of economical and social improvement of the country, The People's Bank of China (chin. 中国人民银行, central bank of the PRC) decided to reduce the basic borrowing rates (LPR – debt Prime Rate). This was justified by the urgent request to accelerate reforms and to strengthen countercyclical adjustments in order to better support the real economy and to strengthen the improvement of the second largest economy in the world.

The People's Bank of China besides decided to lower the REPO (Reverse Repurchase Rate) seven-day transaction rate by 10 basis points to 1.7% of 1.8%.

As regards the mention interest rate (LPR) of one-year loans, it reduced it to 3.35% from 3.45% and five-years to 3.85% from 3.95%.

This will surely lead to decisions by another ministries, starting the next phase of stimulation, implemented with different tools. These decisions will include taxation reforms that would give local authorities more fiscal revenue, as well as further measures to reverse the decline in housing and property prices and stimulate mediocre consumption.

Based on: pbc.gov.cn

Author: 梁安基 Andrzej Z. Liang, 上海 Shanghai, 中国 China

Email: [email protected]

Editorial: Leszek B.

Email: [email protected]

© www.chiny24.com