People’s Bank of China (PBOC) Governor Pan Gongsheng announced a 50 basis point cut to the reserve requirement ratio (RRR) during a press conference on Tuesday. He also revealed plans to lower the 7-day repo rate to 1.5% from 1.7% and reduce down payments for second homes to 15% from 25%.
Pan emphasized the need to coordinate monetary and fiscal policies to support a steady recovery in prices. He indicated that further RRR cuts could occur by year-end, with large banks’ financial weighted ratio dropping to 8%. Additionally, the medium-term lending facility (MLF) will be reduced by 0.3%, and the loan prime rate (LPR) will be lowered by 0.2 to 0.25%.
Addressing concerns about declining home prices, Pan stated that existing mortgage interest rates could fall by an average of 0.5 percentage points, reducing household interest payments by approximately 150 billion Yuan. He confirmed a unified down payment of 15% for all homes.
Market Reaction: Following these announcements, AUD/USD is holding gains near 0.6850 as traders await the Reserve Bank of Australia (RBA) policy decision for further direction.
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