At 9 a.m. today, the State Council Information Office held a press conference where Pan Gongsheng, Governor of the People's Bank of China, Li Yunzhe, Head of the National Financial Supervision Administration, and Wu Qing, Chairman of the China Securities Regulatory Commission, introduced information regarding the "package of financial policies to support market stability and expectations."
Pan Gongsheng stated that on April 25, the Central Political Bureau held a meeting to analyze and study the current economic situation and economic work. To implement the spirit of the Central Political Bureau meeting and further carry out a moderately loose monetary policy, the People's Bank will strengthen the macro-control efforts and introduce a package of monetary policy measures, mainly consisting of three categories and a total of ten measures.
The first category is quantitative policy, mainly through measures such as lowering the reserve requirement ratio, to increase the medium and long-term liquidity supply and maintain ample market liquidity. The specific measures are as follows:
1. Lower the deposit reserve requirement ratio by 0.5 percentage points, which is expected to provide approximately 1 trillion yuan in long-term liquidity to the market.
2. Improve the deposit reserve requirement system, temporarily lowering the reserve requirement ratio for auto finance companies and financial leasing companies from the current 5% to 0%.
The second category is price policy, mainly including lowering the policy interest rate, reducing the interest rates of structural monetary policy tools, and lowering housing fund loan interest rates. The specific measures are as follows:
3. Lower the policy interest rate by 0.1 percentage points, that is, the seven-day reverse repurchase rate in the open market will decrease from the current 1.5% to 1.4%, which is expected to drive the loan market quotation rate (LPR) down by about 0.1 percentage points.
4. Lower the interest rates of structural monetary policy tools by 0.25 percentage points, including the interest rates of various special structural policy tools. For example, the interest rate for re-loaning to support agriculture and small businesses will be reduced from the current 1.75% to 1.5%; the interest rate for pledged supplementary loan (PSL) will be lowered from the current 2.25% to 2%.
5. The interest rate for personal housing provident fund loans is reduced by 0.25 percentage points, with the rate for first-time homebuyers on loans of five years or longer dropping from 2.85% to 2.6%, and rates for other periods adjusted simultaneously.
The third type is structural policies aimed at improving existing structural monetary policy tools and innovating new policy tools to support technology innovation, expand consumption, and inclusive finance, among other areas. The specific measures are as follows:
6. Increase the re-loan quota for technological innovation and technological transformation by 300 billion yuan, raising it from the current 500 billion yuan to 800 billion yuan, continuously supporting the implementation of the 'Two New' policy, namely large-scale equipment updates and consumer goods trade-ins.
7. Establish a 500 billion yuan 'service consumption and retirement re-loan' to guide commercial banks to increase credit support for service consumption and retirement.
8. Increase the re-loan quota for supporting agriculture and small businesses by 300 billion yuan and lower the re-loan interest rate, creating a synergistic effect with the policy of lowering re-loan interest rates to support banks in expanding loans to agricultural small and micro enterprises and private enterprises.
9. Optimize two monetary policy tools that support capital markets, merging the swap convenience of 500 billion yuan for securities, funds, and insurance companies with an additional 300 billion yuan for share buyback re-loans, resulting in a total quota of 800 billion yuan.
10. Establish a risk-sharing tool for technology innovation bonds, with the central bank providing low-cost re-loan funds which can be used to purchase technology innovation bonds, cooperating with local governments and market-oriented credit enhancement institutions, etc., through diverse credit enhancement measures such as joint guarantees, to share part of the default loss risk on the bonds, and to provide support for technology innovation enterprises and private equity institutions to issue low-cost, long-term technology innovation bonds.
The above three categories consist of a total of ten main policy measures that will be gradually disclosed and implemented on the People's Bank of China website.
Editor/rice
