China’s central bank chief set to hold press conference days after Fed rate cut

BEIJING – Pan Gongsheng, governor of the People's Bank of China, will address reporters on Tuesday along with two other heads of financial regulators.

The relatively rare high-level press conference was arranged after the Federal Reserve cut interest rates last week. This kicks off an easing cycle, theoretically giving China’s central bank room to further cut interest rates and boost growth in the face of deflation.

Pan will take office as governor of the People's Bank of China in July 2023. . Such policy announcements are rarely made during such events and are usually disseminated online and through official media.

He then told reporters in March that there was room for further cuts in the reserve ratio as China's annual two sessions took place. This reduction is widely expected to occur in the coming months.

Unlike the Federal Reserve, which focuses on key interest rates, the People's Bank of China uses a variety of interest rates to manage monetary policy. The People's Bank of China on Friday did not change its prime lending rate, a benchmark that affects loans to businesses and households, including mortgages.

China's government system also means policymaking goes far beyond Tuesday's speech by financial regulators. Such high-level meetings in July called for efforts to achieve full-year growth targets and expand domestic demand.

Although the People's Bank of China has kept its prime lending rate unchanged since the Fed cut interest rates, it has begun to lower short-term interest rates that determine the money supply. People's Bank of China Monday Lower the 14-day reverse repo rate Raised 10 basis points to 1.85%, but did not lower the 7-day reverse repo rate July cuts to 1.7%. Pan expressed his hope 7-day interest rate becomes main policy rate.

China's economic growth has slowed, weighed down by sluggish real estate and sluggish consumer confidence. Economists are calling for more stimulus, especially on the fiscal front.

Shan Hui, chief China economist at Goldman Sachs, said: “In the past year, policy easing, including monetary, fiscal and housing policies, has been slow and gradual. This easing approach has in turn led to the formation of various negative feedback loops in the economy.” a team said in a Sept. 22 report.

Their analysis suggests that local government bond issuance is more about addressing budget shortfalls than supporting additional growth.

Li Yunze, director of the State Financial Supervision and Administration Bureau, and Wu Qing, chairman of the China Securities Regulatory Commission, are also scheduled to speak at Tuesday's news conference.

The State Financial Supervision Bureau was established last year as part of Beijing's reform of the financial supervision system. It replaced the Banking and Insurance Supervisory Authority and expanded its responsibilities for overseeing investor protection and supervising financial holding companies. The two previously fell under the purview of securities regulatory agencies and the central bank respectively.

Wu was appointed chairman of the China Securities Regulatory Commission in early February after the stock market plunged. Previously, he served as head of the Shanghai Stock Exchange.