China’s central bank cut its benchmark interest rate on Thursday to try to restart activity amid a slowdown in the world’s second-largest economy.
The central bank announced that the required reserve ratio (RRR), which refers to the portion of deposits banks must keep in their coffers, will be cut by 0.25 basis points from Friday.
The…
China’s central bank cut its benchmark interest rate on Thursday to try to restart activity amid a slowdown in the world’s second-largest economy.
The central bank announced that the required reserve ratio (RRR), which refers to the portion of deposits banks must keep in their coffers, will be cut by 0.25 basis points from Friday.
He emphasized that the RRR will now be around 7.4%.
The decision comes ahead of the release of a series of key indicators for the Chinese economy in August.
The last rate cut was in March and was a move widely anticipated by markets.
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According to Macquarie Investment Bank economist Larry Hu, the decision seeks to “push banks to lower rates for existing mortgage loans” amid a crisis in the real estate sector that is hitting the Chinese economy hard.
The Chinese economy has recently been dragged down by uncertainty in the labor market and the global recession, which has weighed on demand for the Asian giant’s products.
Financial woes in the real estate sector, with many heavyweights in the sector on the brink of bankruptcy and struggling to complete projects, have significantly hampered growth.
In another sign of the slowdown, home loans last month hit their lowest level since 2009.
The economic slowdown has put at risk the growth target set by the authorities, which is 5% this year.
If achieved, it would in any case be one of China’s slowest annual growth rates in decades, not counting the pandemic period.
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