CHINA ANNOUNCES LOWER REPOS RATE, NEW MONETARY POLICY TOOLS

BEIJING, Sept 24 (BERNAMA-Xinhua) -- Pan Gongsheng, governor of the People's Bank of China, said Tuesday that the central bank will reduce the interest rate of seven-day reverse repurchases from 1.7 per cent to 1.5 per cent.

The reduction was aimed at guiding the loan prime rate (LPR) and the deposit rate to move downwards and maintaining stability in the net interest margin of commercial banks, Pan said at a press conference, reported Xinhua.

China will cut the reserve requirement ratio by 0.5 percentage points soon, providing about 1 trillion yuan (about U$141.78 billion) in long-term liquidity to the financial market.

The Chinese central bank will create new monetary policy tools to support the stable development of the stock market, he added

It will establish a swap programme for securities, funds, and insurance companies to obtain liquidity from the central bank through asset collateralisation.

The programme will significantly enhance the companies' ability to acquire funds and increase their stock holdings, Pan said.

The central bank will also create a special re-lending facility to guide banks to provide loans to listed companies and their major shareholders for buybacks and increasing shareholdings, Pan said. 

Pan also added that mortgage rates on existing home loans will be lowered to a level similar to those of newly issued housing loans.

The average reduction in mortgage rates for existing home loans is expected to be around 0.5 percentage points.

The minimum down payment ratio for both first and second homes will be unified, with the nationwide minimum down payment ratio for second homes to be reduced from 25 per cent to 15 per cent, Pan said.

--BERNAMA-XINHUA