This morning, when we reported that a sudden – and extremely overdue – urgency appeared to grip Beijing’s top power echelons in fasttracking a bunch of new monetary stimulus measures, including a cut in the 14-day reverse repo tool, we said to expect much more during today’s impromptu briefing on the economy, attended by the country’s three top financial regulators, which had fueled speculation that China was about to unleash far more efforts to revive growth, among which further cuts to the country’s Reverse Repo rate, and LPR rate but also cuts to the RRR and various other monetary stimulus measures.
That’s precisely what happened moments ago when PBoC Governor Pan Gongsheng unleashed what Bloomberg called a “stimulus blitz”, and what we call “sheer panic”, when he announced a bevy of stimulus measures to prop up the sinking economy and crashing stock market. Among these:
- The PBOC will reduce the 7-day reverse repo rate by 20bps.
- The PBOC will cut the reserve requirement ratio by 0.5%, a move that will free up1 trillion yuan ($142 billion) in liquidity, Pan said.
- China may also cut the RRR further this year by another 0.25 to 0.5% at the appropriate time.
- The PBOC will cut the 1 Year MLF rate by 30bps
- The PBOC will also lower the rates for existing mortgages and cut the down payment ratio on second homes to 15% from 25%.
- The deposit rate will be lowered to “neutralize” the impact on bank margins.
“Monetary policy easing come bolder than expected, with both rate cuts and RRR cuts announcing at the same time,” said Becky Liu, head of China macro strategy at Standard Chartered Plc. “We see room for bolder easing ahead in the coming quarters, following the Fed’s outsized rate cuts.” […]
— Read More: www.zerohedge.com
