The People’s Bank of China (PBOC) on Tuesday announced its largest stimulus package since the COVID-19 pandemic began to help meet this year’s 5% economic growth target.

China’s central bank outlined a strategy that includes increased funding and interest rate cuts aimed at boosting consumer confidence.

The PBOC plans to lower reserve requirement ratios (RRR) for banks by 50 basis points. This move could potentially release around 1 trillion yuan (approximately US$142 billion) for new lending.

It also launched new tools to improve access to capital markets, including a 500 billion yuan swap program for stock purchase financing. Additionally, it introduced up to 300 billion yuan in loans to banks for supporting share buybacks.

In reaction to the announcement, Chinese stocks and bonds gained, driving Asian stock markets to 2.5-year highs. The yuan also strengthened, reaching a 16-month high against the U.S. dollar.