China announced measures on the 29th centred on cutting some central bank lending rates and subsidising mortgage interest payments, aimed at shoring up a slowing economy. The People's Bank of China said in a statement that it would lower the rate on pledged supplementary lending by 25 basis points, cutting the one-year PSL rate to 1.5% from 1.75%, and would expand the scope of PSL to support investment in water conservancy, power grids, computing, telecommunications, urban pipelines and logistics networks. The central bank also raised its relending quota for supporting scientific and technological innovation and technological upgrading by 200 billion yuan to 1.4 trillion yuan, its relending quota for agriculture and small and medium-sized enterprises by 500 billion yuan to 4.85 trillion yuan, and its relending quota for private enterprises by 300 billion yuan to 1.3 trillion yuan. The central bank said it would maintain ample liquidity and guide interest rates to a level that supports the real economy. Separately, the central bank and financial regulators announced on the 29th that, starting October 1, they will subsidise interest payments on new mortgages nationwide for first-time homebuyers who meet certain conditions. According to a statement from the Ministry of Finance, the government will cover 1 percentage point of annual interest on eligible loans for up to five years, with eligible borrowing capped at 1 million yuan per household and eligible homes limited to those with a floor area of 120 square metres or less and a purchase price of 1.5 million yuan or less per household.
PBOC cuts the PSL rate to 1.5% and eases policy, pushing Chinese government bond yields lower.
PBOC rate cuts and mortgage subsidies ease policy, weakening the yuan versus the dollar.
