PBOC announces major stimulus with interest rate cuts and reserve requirement reductions.
The reserve requirement will release 1 trillion yuan to boost lending and market liquidity.
US Fed’s rate cut sparks crypto market surge raising inflation concerns & Bitcoin highs.
China’s central bank, the People’s Bank of China (PBOC), has announced a major economic stimulus package. This is the bank’s most aggressive move since the pandemic. The package includes interest rate cuts, reserve requirement reductions and property market support.
China's central bank unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk and back towards the government's growth target, but analysts warned more fiscal help was vital to hit these goals https://t.co/fTxubJBGJM pic.twitter.com/ETyEdHf1Oq
— Reuters (@Reuters) September 24, 2024
The PBOC has also reduced the reserve requirement ratio (RRR) by 50 basis points, to release 1 trillion yuan ($142 billion) for lending. This is in order to increase the overall liquidity in the market and encourage banks to lend more. The central bank will also reduce the seven-day reverse repo rate by 0.2 percentage points. This reduces the borrowing costs for businesses and households.
The announcement also includes support for the property market support package. This package suggests interest rate cuts on existing mortgages and lowers the minimum downpayment requirements.
US Fed’s Interest Rate Cut
The US Federal Reserve’s recent interest rate cut has had a major impact on the cryptocurrency market. Many analysts believe it will lead to increased investment in riskier assets like cryptocurrencies. However, there are concerns that a rate cut could cause inflation. In addition, a stronger Japanese yen could negatively affect crypto prices. Arthur Hayes, co-founder of BitMEX, has warned of a potential crash.
Crypto Market Surges
Despite these concerns, the cryptocurrency market has surged after the Fed’s rate cut. Bitcoin, for example, has exhibited a remarkable recovery from the recent lows. Analysts predict further growth in the coming months in the crypto market.
Community members think that PBOC’s stimulus package and the US Fed’s rate cut could significantly impact the global economy, including the cryptocurrency market.
The PBOC’s measures could boost China’s economy, increasing demand for goods and services. This could lead to increased demand for cryptocurrencies as a store of value and payment method. The US Fed’s rate cut could lead to inflation and a stronger Japanese yen, which could affect the cryptocurrency market negatively. However, the overall effect on cryptocurrencies is likely to be positive.
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