China's Central Bank Unveils Broad Stimulus Measures Amid Economic Downturn

China's central bank announced broad monetary stimulus and property market support measures to combat deflationary pressures and revive its economy. Key steps include lowering borrowing costs, reducing mortgage repayment burdens, and freeing up funds for new lending. Analysts urge additional fiscal measures to complement the monetary policies introduced.

China's central bank unveiled a comprehensive monetary stimulus and property market support measures on Tuesday to help revive an economy facing strong deflationary pressures and the threat of missing its annual growth target. The surprising move aims to restore confidence in the world's second-largest economy following a period of disappointing data.

Analysts, however, noted a lack of policies to support real economic activities. Due to weak demand for credit from businesses and consumers, more fiscal stimulus may be necessary to complement the measures announced by the People's Bank of China to achieve this year's growth target of roughly 5%. "This is the most significant PBOC stimulus package since the early pandemic days," said Capital Economics analyst Julian Evans-Pritchard.

Chinese stocks and bonds rallied, and Asian stocks peaked at 2-1/2 year highs as Governor Pan Gongsheng announced plans to lower borrowing costs, inject more liquidity, and ease the household mortgage repayment burden. The central bank will also reduce the reserve requirement ratios and interest rates to boost lending. Despite this, economists emphasize that additional fiscal measures are necessary for sustained economic growth.

(With inputs from agencies.)