Advertisement
Banking & finance
EconomyChina Economy

China releases US$72.6 billion of liquidity with cut to banks’ reserve requirement ratio

  • China’s central bank has vowed to keep monetary policy ‘targeted and powerful’ amid market concern about consumer demand and rising external risks
  • The cut, effective March 27, will lower the average reserve requirement ratio of Chinese financial institutions to 7.6 per cent

Reading Time:3 minutes
Why you can trust SCMP
2
The decision by the People’s Bank of China is expected to inject 500 billion yuan (US$72.6 billion) worth of liquidity into the market. Photo: Reuters
Frank Tangin Beijing

China’s central bank announced on Friday a cut to the amount that banks set aside for deposits by 25 basis points, vowing to keep ample liquidity in the interbank system and better fund the real economy.

The decision by the People’s Bank of China (PBOC) to slash the reserve requirement ratio (RRR) comes just days after China’s new government took office and freshly inaugurated Premier Li Qiang pledged to achieve an annual economic growth target of around 5 per cent this year.

The cut, effective March 27, is expected to inject 500 billion yuan (US$72.6 billion) worth of liquidity into the market, while the average reserve requirement ratio of Chinese financial institutions will be lowered to 7.6 per cent.

Advertisement

“The PBOC will keep monetary policy targeted and powerful,” the central bank said in a statement.

“We’ll provide better support for key areas and weak links, refrain from a big stimulus … and concentrate on pushing for high-quality development.”

03:24

China’s new premier Li Qiang outlines priorities in first press conference

China’s new premier Li Qiang outlines priorities in first press conference
The previous cut was in December – one of two reductions, 25 basis points each, that were registered for the whole of last year.
Advertisement
Select Voice
Choose your listening speed
Get through articles 2x faster
1.25x
250 WPM
Slow
Average
Fast
1.25x