At the State Council Information Office press conference held on the 7th, the heads of the People’s Bank of China, the State Financial Supervision and Administration Bureau, and the China Securities Regulatory Commission introduced the relevant situation of “a package of financial policies to support the stabilization of the market and expectations” and answered questions from reporters. At the press conference, Pan Gongsheng, governor of the People’s Bank of China, announced that the reserve requirement ratio would be reduced by 0.5 percentage points, providing the market with about 1 trillion yuan of long-term liquidity, and reducing the policy interest rate by 0.1 percentage point.
Wang Qing, chief macro analyst of Orient Securities, said that this means that the extraordinary counter-cyclical adjustment in 2025 has been launched. This time, the reserve requirement ratio and interest rate cut have two main functions. First, it will reduce the loan interest rates of enterprises and residents, enhance the lending capacity of banks, and expand investment and consumption; second, the monetary policy of reducing the reserve requirement ratio and interest rates is a big move, which has released a strong signal of stabilizing growth, helping to boost market confidence, stabilize the macroeconomic trend, and stabilize the overall employment situation.
Wang Qing judged that after this interest rate cut, the interest rate of residents’ mortgage loans will be further reduced, which is a key move to promote the real estate market to stop falling and stabilize this year. The reserve requirement ratio and interest rate cut will undoubtedly effectively guide the expectations of the capital market and are the fastest positive factors in the current market. As for the foreign exchange market, the reduction of reserve requirement ratio and interest rate will play an important supporting role in stabilizing the RMB exchange rate. He predicts that there will be new incremental policies including fiscal reinforcement and consumption promotion, and there is still room for interest rate and reserve requirement ratio reduction.
