MNI BRIEF: PBOC Cuts RRR By 25bp To Support Recovery

The People’s Bank of China announced a 25 basis-point cut in the reserve requirement ratio on Thursday to offer long-term liquidity and support the economic recovery.

The reduction, effective on Sept.15, aims to “consolidate economic recovery and maintain reasonable and ample liquidity,” according to a statement on the PBOC’s website. It is the second RRR cut this year after a 25bp reduction in March and the weighted average RRR for financial institutions will be around 7.4% after the cut, it noted.

The central bank will “implement prudent monetary policy at an effective and accurate pace, and ensure rational credit growth,” it said, pledging to better support key areas and ensure basic stability of the yuan exchange rate.

MNI earlier reported, citing advisors, that the PBOC was likely to use its broad array of easing tools, including RRR reduction, since the economy has suffered increasing headwinds. (see: MNI PBOC WATCH: PBOC to Hold Key Rates, But RRR Reduction Eyed)