China banks to cut interest rates in stimulus bid
interest rates on existing mortgages and deposits, the latest state-directed measures to shore up growth in the world's second-largest economy.
The big state-owned lenders are working on reducing rates on the majority of the nation's 38.6 trillion yuan ($5.3 trillion) of outstanding mortgages, according to people familiar with the matter. The reductions will only affect loans on first homes, two of the people said.
Lenders such as Industrial & Commercial Bank of China Ltd.
and China Construction Bank Corp. are also poised to cut deposit rates later this week for the third time in a year, people familiar said.
The moves are part of a targeted push by Beijing to spur consumer spending, drive more funds into the stock market and alleviate pressure on lenders' profit margins.
While Chinese shares gained in offshore trading after Bloomberg reported the banks' plans, it's unclear whether the moves will be enough to spark a sustained revival in investor confidence.
Authorities have so far avoided broader stimulus measures despite a deepening property crisis and growing deflation pressures that have put the government's economic growth target of around 5% at risk.
«This is an incremental policy step, not a game changer because people's confidence is still low,» said Larry Hu, head of China economics at Macquarie Group. «I think we're going to see property easing come through in the coming weeks, I just don't know if it's going to be strong enough.» The People's Bank of China didn't immediately respond to a request for comment.
The cuts to mortgage rates were highly anticipated by investors after the central bank hinted at support in mid-July.
