The People’s Bank of China cut down the reserve requirement ratio for most lenders in the country to unleash about 530 billion yuan into the financial system in a bid to boost the economic recovery after the COVID-19 pandemic.
- The reserve requirement ratio was lowered by 25 basis points for most banks and 50 basis points for smaller banks, effective April 25. This is the first reduction after the ratio was cut in December 2021.
- The central bank said the latest move will bring down the weighted average ratio for banks to 8.1% from 8.4%, as it seeks to boost long-term fund sources for banks and to assist them to use the liquidity actively to support local businesses.
- The PBOC said it will monitor the changes in inflation to ensure that prices remain stable, with liquidity already at a sufficient level. It will also look into the changes in monetary policy across major economies.
Economists believe the PBOC could move away from any cuts soon, as rates are already low and reductions are becoming less effective in addressing economic challenges.
MCHI is up 1.51%, while BABA is down 0.09% premarket.
Source: Bloomberg
