China gives modest boost to economy with RRR cut

This article is more than 12 months old

May 07, 2019 06:00 am

BEIJING : China's central bank said yesterday it will cut reserve requirement ratios (RRRs) to release about 280 billion yuan (S$56 billion) for some small and medium-sized banks, in a targeted move to help companies struggling amid an economic slowdown.

The cut in the amount of cash that banks must hold as reserves would be the smallest since January last year, when the People's Bank of China (PBOC) started its latest round of policy easing to support the world's second-largest economy.

The cut, while widely expected at some point, was announced right before China's stock market opened, and just hours after US President Donald Trump sharply escalated trade tensions between the world's two largest economies.

The PBOC said in a statement that the reduction will come into effect on May 15. The funds will be used for loans to small and private companies.

The central bank said it will cut the RRR for about 1,000 rural commercial banks operating in counties to 8 per cent, equal to the RRR for smaller rural credit cooperatives.

Small and medium-sized banks currently have RRRs ranging from 10 per cent to 11.5 per cent. The PBOC has already delivered five RRR cuts since early last year. - REUTERS