The People's Bank of China (PBOC), the nation's central bank, announced on Tuesday that it will lower the bank reserve requirement ratio by 0.5 percentage points, releasing approximately 1 trillion yuan ($141.81 billion) of long-term liquidity into the financial system.
Pan Gongsheng, the governor of the PBOC, stated at a press conference that the country will also reduce its key short-term policy interest rate. The interest rate on 7-day reverse repos will be cut by 0.2 percentage points, bringing it down from the current 1.7 percent to 1.5 percent.
This adjustment aims to encourage reductions in both the loan prime rate (LPR) and deposit rates, thereby helping to preserve a stable net interest margin for commercial banks, Pan explained.
The central bank reiterated its focus on maintaining a monetary policy geared toward supporting the real economy and emphasized its efforts to improve the precision and effectiveness of its policy measures, Pan added.