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[SHANGHAI] China's reduction of bank reserve requirements, the first time it had done so in over two years, is not the start of a strong stimulus for the economy and does not represent a policy shift, a senior central bank official said in a Xinhua interview.
Lu Lei, head of the People's Bank of China's research department, told the state-owned news agency in an interview published late on Thursday that the cut was an ordinary policy operation based on the economic situation and liquidity conditions.
He also cited the upcoming Spring Festival holiday which he said tended to trigger strong cash demand. Given the current position of foreign exchange reserves, open market operations alone were not adequate to fill the funding gap, he said.
The central bank lowered the reserve requirement ratio for all commercial banks by 50 basis points on Wednesday.