In September 2023, The People’s Bank of China (PBOC) continued its campaign to boost the Chinese economy by loosening credit conditions and pumping liquidity in the markets when it decided to lower reserve requirements for the second time this year by 25 bps.
This move by the PBOC follows its August cut of the 1-year loan prime rate (LPR) by 10 bps to 3.45%, and its 5-year loan prime rate by 10 bps to 4.20% in June 2023.
Support by the Chinese government highlights their efforts to prop up China’s real economy which has been beset by lagging economic growth, below-expectation recovery in domestic demand, and a pressured domestic job market.
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