BEIJING (Reuters) – China’s central bank said on Monday it would cut the amount of cash that banks must hold as reserves, its second such move this year, releasing 1.2 trillion yuan in long-term liquidity to bolster slowing economic growth amid persistent COVID-19 cases.
The People’s Bank of China (PBOC) said on its website it would cut the reserve requirement ratio (RRR) for banks by 50 basis points (bps), effective from Dec. 15.
The cut will not apply to financial institutions with existing RRR of 5%, it added.
The cut, the second this year following a broad-based reduction in July, was flagged by Premier Li Keqiang on Friday as a way to step up support for the economy, especially small firms.
A Reuters poll in October showed economists expect China’s growth to slow to 5.5% in 2022, but some analysts have since trimmed forecasts on new risks such as a deteriorating real estate sector. The new Omicron coronavirus variant is also seen adding risks.
(Reporting by Beijing newsroom; Editing by Sam Holmes and Ed Osmond)
