central bank on Monday cut the proportion of funds banks must set aside
as reserves, in Beijing’s latest attempt to tackle slowing growth in the
world’s second largest economy.
The People’s Bank of China (PBOC) said in a statement it would trim the
so-called "reserve requirement ratio" (RRR) for financial institutions
by 0.50 percentage points, freeing up more funds for them to lend.
The move came immediately after a G20 finance ministers’ meeting in
Shanghai, which stressed the use of all available policy tools to boost
global growth, and with Chinese and world stock markets assailed by
worries over the economy.
"The move underscores a message that officials have repeated in recent
days, including at the G20 meeting: policymakers still have room to
support the economy," chief China economist at Capital Economics, Mark
Williams, said in a research note.
On Friday, on the sidelines of the G20 ministers meeting, PBOC chief
Zhou Xiaochuan said China could still use monetary tools to help boost
its slowing economy."China still has some monetary policy space and
monetary policy tools to address potential downside risk," he said.
Before the announcement of the RRR cut, the central bank pumped 230
billion yuan ($35 billion) into the financial system Monday to ease
tight liquidity, bringing total fund injections over the past week to
more than 1.0 trillion yuan, according to state media.