China to Lower Banks’ Reserve Requirement to Aid Growth
China’s central bank will increase the supply of cheap funding to banks by cutting the amount of cash they need to hold as reserves, a move aimed at putting a floor under economic growth in 2020.\n\nClick here for the podcast: https://bit.ly/2MOJxxQ
China lowers reserve rates for banks again
The Central Bank of China announced another cut in the amount of cash that banks must keep as reserves, issuing a total of 900 billion yuan to support the slowing economy.
According to the information on the website of the People’s Bank of China, the regulator will reduce the reserve requirement ratio by 50 basis points (BPS) for all banks, with an additional reduction of 100 BPS for some qualified banks..
To date, the local central bank has cut cash flow seven times since the beginning of 2018.
General requirements will come into force on September 1. 16. The additional target reduction will be carried out in two stages, and will take place on October 15 and November 15, respectively.
Despite a series of support measures and monetary easing since last year, China’s economy is still struggling to fully recover.. July data showed GDP growth slowed faster than expected.
The reason was the trade conflict between the United States and China, which affected both business and consumers in the Middle Kingdom..
Economist Freya Beamish said another cut was not a surprise.
«In my opinion, today’s change is partly an addition to the previous measures, and also reflects actions to support the local currency. The NBK is likely to cut its interest rate corridor by another 20 (basis points) this month following the Fed’s rate cut», – she said.