China will cut bank reserve requirement in 'timely manner': state media
Reuters
Published Sep 04, 2019 08:21AM ET
China will cut bank reserve requirement in 'timely manner': state media
BEIJING (Reuters) - China will implement both broad and targeted cuts in the reserve requirement ratio (RRR) for banks "in a timely manner," China's cabinet said in a meeting on Wednesday, state media reported, an indication that a cut in the key ratio could be imminent.
The People's Bank of China (PBOC) has been widely expected by analysts to roll out more RRR cuts this year as the world's second-largest economy sputters amid a trade war with the United States.
"(We) will use both broad and targeted RRR cuts in a timely manner as tools to guide financial institutions to guide more funds into inclusive finance, and ramp up support for the real economy," state broadcaster CCTV reported, citing the state council meeting, which was chaired by Premier Li Keqiang.
The last time the PBOC implemented a broad cut for all banks was in January, when the RRR was lowered by a total of 100 basis points in two stages, freeing up $116 billion for new lending.
The state council, or cabinet, also stressed the need to ensure the economy grows at a "reasonable range", state broadcaster CCTV reported. China aims to achieve GDP growth of between 6% and 6.5% in 2019.
China will maintain a prudent monetary policy, and fine-tune the policy in a preemptive way, CCTV said in a report on the meeting.
The reserve requirement ratio is the share of cash that banks must hold in reserve, and cutting it unleashes liquidity for lending. A "broad" cut applies to most or all lenders, while targeted cuts are applied to certain segments of the banking sector.
The PBOC has cut the RRR six times since early 2018, with Beijing urging cautious banks to keep lending to struggling businesses, especially smaller, private firms that account for over half of the country's economic growth and most of its jobs.
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Written By: Reuters
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