PBOC Cuts Reserve Ratio For Banks To Boost Liquidity
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2023-03-17 HKT 18:50
China's central bank said on Friday it would cut the amount of cash that banks must hold as reserves for the first time this year to help keep liquidity ample and support a nascent economic recovery.
Chinese leaders have pledged to step up support for the world's second-largest economy, which is gradually rebounding from a pandemic-induced slump.
The People's Bank of China said it would cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5 percent reserve ratio, by 25 basis points, effective March 27.
"Policymakers wish to maintain the economic momentum," said Zhou Hao, economist at Guotai Junan International.
The central bank said the cut reflected its intention to "make a good combination of macro policies, improve the level of services for the real economy, and keep liquidity reasonably sufficient in the banking system".
The weighted average RRR for financial institutions stood at around 7.6 percent after the cut, the central bank said.
China has set a target for economic growth this year of around 5 percent. (Reuters)