China prepares for testing 2019 by freeing up US$210 billion in latest move to boost ailing economy
- People’s Bank of China to cut required reserve ratio by one percentage point in January
- Move came hours after Chinese Premier Li Keqian told the central bank to do more to help the growth of the world’s second largest economy
China made its first major monetary policy easing announcement of 2019 on Friday as Beijing prepared to roll up its up sleeves to battle a year that is expected to be filled with economic hardship as well as numerous other challenges at home and abroad.
The People’s Bank of China (PBOC), China’s central bank, will cut the amount of money banks are required to hold in reserve with it by one percentage point, a move that could pump 1.5 trillion yuan (US$210 billion) of additional liquidity into the banking system to help arrest a deepening economic slowdown.
It will reduce the required reserve ratio (RRR) by 0.5 of a percentage point on January 15 and again on January 25 so that banks have sufficient funds to lend, especially to private firms and small businesses.
The policy move was announced hours after Chinese Premier Li Keqiang told the central bank to make universal cuts of the ratio as part of Beijing’s efforts to bolster economic growth having cut the RRR four times last year.
The order from Li to the central bank, which is part of the Chinese government, showcased Beijing’s willingness to go further in policy easing to keep its economic growth on track.
