Announcement from the PBOC on Wednesday
- to cut the reserve requirement ratio (RRR) for financial institutions by 50 basis points from Jan 6
In effect this is a cut to the amount of reserves a lender must hold
- It will release funds for lending
A PBOC official said the RRR cut will impact to offset cash demand ahead of the Spring Festival, banking system liquidity will remain basically stable
- Said it does not amount to “flood-like” stimulus” – the stance of prudent monetary policy has not changed