China’s central bank cut the level of money it requires banks to hold in reserves in a move to bolster economic growth. The People’s Bank of China cut its reserve requirement ratio by 0.25% for commercial banks. China is dealing with slower growth as it battles fresh rounds of COVID-19 outbreaks. Loading Something is loading.
China’s central bank on Friday reduced the amount of cash it requires banks to hold in their reserves, moving to bolster the nation’s economy hurt by COVID-19 and facing its slowest growth in three decades.
The People’s Bank of China cut its reserve requirement ratio, or RRR, by 0.25% for commercial banks. An additional cut of 0.25% was enacted for smaller commercial banks and rural lenders, according to a translation of the bank’s statement.
The moves leave the weighted average of the reserve ratio in the banking system at 8.1%. The central bank said its aim is to support economic development and to promote stability of financing costs. The RRR reduction should push 530 billion yuan ($83.19 billion) of liquidity into the economy.
The RRR cut of 0.25% was below market expectations, according to the South China Morning Post. While the central bank cut the RRR, it unexpectedly decided not to reduce a key interest rate, leaving the one-year medium-term loan rate at 2.85%. In equity trading Friday, the SSE Composite in Shanghai fell 0.5% and the Shenzhen Composite Index fell 1%.
China has been dealing with a new round of COVID outbreaks that’s prompted officials to order lockdowns for millions of people, notably in Shanghai and manufacturing hubs including Shenzhen.
Beijing in March set a 2022 economic growth target of around 5.5%, the lowest target since 1991.
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