Bloomberg:

My question is about interest rate policy. You spoke earlier about the reserve requirement ratio (RRR) cut the PBC made at the start of the year. How much space does the PBC have to cut interest rates further and also to reduce the RRR further this year? And do you see the necessity for that with the economy the way it is now? Thank you.

Lu Lei:

Thank you for your questions. As mentioned earlier, Zou Lan, director general of the Monetary Policy Department of PBC, is here with us. I'll ask Mr. Zou to answer these questions.

Zou Lan:

Thank you for your questions. Adjustments to reserve requirement ratios and interest rates need to be evaluated based on economic trends. Among these, the RRR is a tool for providing long-term liquidity, while 7-day reverse repos and medium-term lending facilities address medium- and short-term liquidity fluctuations. This year, we've also added government bond trading tools. By using these tools comprehensively, our goal is to maintain reasonable and ample liquidity in the banking system. The effects of the RRR cut at the beginning of the year continue to emerge. Currently, the average RRR for financial institutions is about 7%, leaving some room for adjustments.

Regarding interest rates, as Mr. Lu mentioned, the PBC has continued to steadily reduce overall financing costs. Since the beginning of this year, one-year and five-year-plus loan prime rates have decreased by 0.1 percentage point and 0.35 percentage point, respectively, driving a continuous decline in average loan rates. However, factors like the speed of bank deposit shifts to asset management products and narrowing bank net interest margins constrain further reductions in deposit and loan rates. The central bank will closely monitor policy effects and adjust the intensity and pace of monetary policy based on economic recovery, goal achievement and specific macroeconomic issues.

Thank you!