China to cut banks’ reserve requirement ratio next month, set to inject 1 trillion yuan into market
China’s central bank announced on Wednesday it would cut the amount of cash that commercial banks must hold as reserves from February 5, as Beijing moved to quell market panic and revive investor confidence.
The 50 basis points cut to the reserve requirement ratio (RRR) is expected to inject 1 trillion yuan (US$140 billion) of liquidity into the market, governor Pan Gongsheng told a press conference in Beijing.
“We’ll use a variety of tools to maintain an ample liquidity in 2024,” Pan said.
“For the next step, we will strengthen monitoring of financial risks and enhance early warning and assessment capabilities.”
‘Growth nothing to write home about’: 7 takeaways from China’s economic data
‘Growth nothing to write home about’: 7 takeaways from China’s economic data
The People’s Bank of China said it would also slash the relending and rediscount rate for bank loans designated for small firms and agricultural businesses by 25 basis points to 1.75 per cent, effective from Thursday.
The Hang Seng Index in Hong Kong had extended its recent rally from 2 to about 4 per cent after Pan announced the rate cut. It closed up 3.56 per cent on Wednesday.
The benchmark Shanghai composite index, meanwhile, closed up by 1.8 per cent on Wednesday.
