ALBAWABA – The government of China is enacting a broad set of economic stimulus, including interest rate cuts and possibly property support, in an attempt to re-boost the world’s second-largest economy, news agencies reported Tuesday.
According to Reuters, the central bank of China has already cut short-term borrowing rates for the first time in 10 months.
The People's Bank of China cut its seven-day reverse repo rate by 10 basis points to 1.90 percent from 2.00 percent on Tuesday. The central bank also injected 2 billion yuan ($279.97 million) in short-term bonds.
The yuan hit a six-month low at 7.1680 per dollar after the rate decision, while yields on China's benchmark 10-year government bonds fell to a fresh 7-1/2-month low, Reuters reported.
An intergovernmental stimulus proposal is currently being reviewed by the government. It includes at least a dozen measures to support real estate and domestic demand, unanimous sources have confirmed to Bloomberg.
A key part of the proposed stimulus package is supporting the real estate market.
Regulators are seeking to lower costs on outstanding residential mortgages and boost re-lending through the nation’s policy banks to ensure homes are delivered, Bloomberg reported.
However, the package has yet to be finalized and may be subject to change, according to Bloomberg.
The State Council may discuss the policies on Friday, but it is unclear when they will be announced or implemented, the sources told the New York-based news agency.
Muted market reactions to the central bank’s reverse repo rate cut on Tuesday indicated mounting scepticism on whether or not it is enough to reinvigorate the economy, Bloomberg explained.
China’s economy is weighed down by record debt levels, waning global demand, and weak business confidence, as well as consumers rattled by unpredictable policy shifts.
