China cuts bank reserve ratios again, releases $ 115 billion

BEIJING: The central bank of China said Wednesday that it was cutting the amount of cash that all banks should have as reserves, releasing about 800 billion yuan ($ 115 billion) in funds to underpin the economic slowdown.

The People's Bank of China said on its website that it will reduce the reserve ratio (RRR) of banks by 50 basis points (100 bp = 1 percentage point), effective as of January 6. The measure would reduce the level of large banks to 12.5%.

The PBoC has now reduced RRR eight times since the beginning of 2018 to release more funds for banks to lend as economic growth slows at the weakest pace in almost 30 years. Many investors expected Beijing to announce more support measures soon.

While recent data has shown signs of improvement, and Beijing and Washington have agreed to reduce their protracted trade war, analysts are not sure if any will be sustainable and forecasts that growth will be further cooled this year.