Chinese Central Bank Cuts Reserve Requirement Ratio 25 Basis Points

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The People’s Bank of China (PBOC) has announced an across-the-board cut to the reserve requirement ratio (RRR) for Chinese banking sector financial institutions.

On 25 November PBOC announced that it would reduce the RRR ratio by 0.25 percentage points starting from 5 December, bringing the weighed average RRR for Chinese financial institutions down to to 7.8%.

PBOC said that the move was for the purpose of maintaining rationally ample liquidity, expediting reductions in comprehensive financing costs, implementing the raft of policies and measures for stabilising the economy, and consolidating the foundations for steady improvement of the economy.

PBOC also said that it would “expand the intensity of the implementation of steady monetary policy, endeavour to support the real economy, refrain from engaging in flood-style irrigation, give consideration to both internal and external balancing, make more effective use of the twin functions of quantitive and structural monetary policy, maintain fundamental consistency between growth in the money supply and total social financing with nominal economic growth, support financing of key areas and weak linkages, and drive the economy to achieve effective upgrades in quality and rational growth in quantity.”