China Cuts Reserve Requirement Ratio
06 Dezember 2021 - 08:51AM
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China's central bank lowered its reserve requirement ratio for
the second time this year in order to support growth that is widely
expected to weaken at the end of the year.
The People's Bank of China decided to cut the RRR for major
commercial banks by 50 basis points. The reduction will take effect
on December 15.
The current cut in reserve requirement ratio is set to release
CNY 1.2 trillion in long-term liquidity.
The latest PBoC announcement came after Premier Li Keqiang last
week said the central bank will reduce the RRR in a timely way.
The bank had reduced the RRR by 0.5 percentage points in
July.
The latest RRR cut will have only a small economic impact,
Julian Evans-Pritchard, an economist at Capital Economics, said.
However, it will form part of a wider effort to push down interest
rates.
The economist expects policy rate cuts before long, but said
that there still appears to be little appetite at the central bank
for a sharp rebound in credit growth.
This RRR cut gives a signal to the market that the government
has turned from aggressive policy actions in the second half of
this year to stabilizing the economy in 2022, Iris Pang, an
economist at ING, said.
ING expects the RRR cut to boost fixed asset investment in
infrastructure, transportation and telecommunications in 2022, and
this would be the main engine of economic growth.
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