In a recent forum in Beijing on October 18, People’s Bank of China Governor Pan Gongsheng announced plans to potentially further lower the reserve requirement ratio (RRR) by 0.25 to 0.5 percentage points before the end of the year, depending on market liquidity conditions. He also indicated that the Loan Market Quote Rate (LPR), which is set to be released on the 21st, could see a decrease of 0.2 to 0.25 percentage points.
The 2024 Financial Street Forum Annual Conference kicked off on the same day, where Pan delivered a speech titled “High-Quality Development and Dynamic Balance of the Chinese Economy,” covering key topics such as real estate, capital markets, the monetary policy framework, economic growth, and opening up to foreign markets.
This announcement follows significant measures taken at the end of September, where the Chinese government notably relaxed mortgage controls and other regulations in the housing market, signaling an ongoing effort to stimulate the economy.
In fact, just last month, China had already reduced the reserve requirement ratio by 0.5 percentage points, cut the seven-day reverse repurchase operation rate by 0.2 percentage points, and lowered the Medium-term Lending Facility (MLF) rate by 0.3 percentage points.
Pan also highlighted that commercial banks announced a reduction in deposit rates earlier in the day, reinforcing expectations of an LPR cut on the 21st by 0.2 to 0.25 percentage points.
