China aims to cut the proportion of cash that commercial banks must keep with the People’s Bank of China, the banking regulator said on Friday, signalling further monetary loosening although the IMF and World Bank say the economy is doing fine.
The China Banking Regulator Commission (CBRC) did not say when reductions in banks’ reserve requirement ratios would be made, but it is the third time in as many months that Beijing has signalled a cut in RRRs, which would free up more cash for lending needed to shore up growth.
The CBRC did, however, qualify its comments, saying RRR reductions would be available to those banks whose lending to small firms and the farm sector warranted the reward. It did not elaborate.
The central bank also signalled on Friday that it would keep credit supply ample by letting China’s main money market rate fall again this week.
Aside from prospects for reductions in banks’ RRR, two bankers told Reuters on Friday that the central bank has also lent $16 billion to commercial banks so that they can issue the money to farming projects.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.