China central bank to cut reserve requirement ratio for second time this year

[BEIJING] 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 (S$257.7 billion) 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 Dec 15.

The cut will not apply to financial institutions with existing RRR of 5 per cent, 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 per cent 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.

REUTERS