The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
In a significant push to stimulate the struggling property sector, three of China's largest cities have relaxed homebuying restrictions following the central government's latest efforts. Guangzhou became the first tier-1 city to completely remove homebuyer eligibility checks and limits on the number of properties owned, according to a statement issued late Sunday. Meanwhile, Shanghai and Shenzhen announced that more people would be eligible to purchase homes in suburban areas and allowed existing homeowners to buy additional properties.
In a move to further boost demand, Shanghai and Shenzhen also lowered minimum downpayment requirements, with first-home buyers needing just 15% and second-home buyers 20%. These changes come as part of China's largest stimulus package to date, aimed at revitalizing the beleaguered property market. The package includes cutting borrowing costs on up to US$5.3 trillion in mortgages and reducing down-payment requirements for second-home purchases to historical lows.
The central government has taken strong action, with top leaders pledging to stop the real estate market's decline. In August, new-home prices fell at their fastest pace since 2014, prompting these aggressive measures. The People's Bank of China (PBOC) also announced it would allow mortgage refinancing for both first and second homes, starting Nov 1. This initiative could further ease financial pressures on homeowners, who will be able to renegotiate terms with lenders.
These changes are expected to reduce annual interest expenses by about 150 billion yuan, offering borrowers relief by slashing rates by an average of 50 basis points. The inclusion of second-home buyers in the mortgage refinancing plan marks a significant expansion compared to similar efforts last year, which focused solely on first-time buyers.
Major banks are expected to announce detailed rules by Oct 12, with refinancing set to be completed by the end of October. This rapid response from state-owned lenders, including Industrial & Commercial Bank of China, Bank of China, and Agricultural Bank of China, highlights the urgency of stabilizing Asia's largest economy, which is grappling with global economic uncertainties.
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