China’s Central Bank Supports Demand and Price Recovery. China’s central bank or PBOC said it would increase demand and support a moderate price recovery.
The PBOC is known to improve its coordination with fiscal and industrial policy, as well as strengthen the mix of expectations while closely monitoring the effects of financial policy.
Strong credit growth in China is known to be in line with recovery. This is because borrowing costs in the real economy have decreased. Then, the distribution of new bank loans also exceeded expectations, almost four times as much in August 2023 compared to July.
This is because the PBOC is trying to support economic growth amidst weak demand at home and abroad. China in recent weeks has also issued a series of measures, including interest rate cuts and property relief measures to boost its struggling economy.
It is known that the central bank last lowered the RRR (Reserve Requirement Ratio), namely the amount of cash that banks must keep as reserves in March 2023. Then, in August 2023, the PBOC also cut the one-year benchmark loan interest rate, or loan interest rate (LPR) by 10 basis points (bps) to 3.45 percent.
China’s Central Bank Supports Demand and Price Recovery. Then, in August, the weighted average interest rate for corporate loans was 3.85 percent, down 20 bps from the previous year, while the average interest rate for mortgages fell by 38 bps to 4.12 percent.