The People's Bank of China (PBOC), the country's central bank, announced on August 6 it would cut the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to boost the slowing economy. It said it would cut the reserve requirement ratio (RRR) by 50 basis points (bps) for all banks.
An additional 100 bps cut for qualified city commercial banks was also announced. The RRR for large banks will be lowered to 13 per cent. The move followed a September 4 cabinet meeting that vowed to implement both broad and targeted cuts in the RRR in a timely manner, according to global newswires.The People's Bank of China (PBOC), the country's central bank, announced on August 6 it would cut the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to boost the slowing economy. It said it would cut the reserve requirement ratio by 50 basis points (bps) for all banks.#
The central bank has slashed the ratio seven times since early 2018 and the amount of funds released now will be the largest so far in the current easing cycle.
The cut releasing 800 billion yuan in liquidity is effective starting September 16. The additional targeted cut will release 100 billion yuan in two phases, effective from October 15 and November 15.
The PBOC said it will maintain a prudent monetary policy and avoid flood-like stimulus, while increasing counter-cyclical adjustments and maintaining reasonable and abundant liquidity.
China’s economy is reportedly still struggling to get back to a strong position. Statistics from July showed growth fell more sharply than expected with the intensifying trade war with the United States. August factory surveys also indicated continued weakness. (DS)
ALCHEMPro News Desk – India
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