MNI BRIEF: PBOC To Cut Reserve Ratio When Needed : Officials

The People’s Bank of China will cut the reserve requirement ratio when necessary and the benchmark loan prime rate will reflect market rate changes at a timely and sufficient pace, officials of the central bank told reporters on Tuesday.

Liu Guoqiang, vice governor of the PBOC, said the RRR, averaging at 8.4% at present, is not high, but there is still space for further cuts according to financial and economic situation, noting the central bank will make every effort to open up its toolkits to support the economy and avoid any possible “collapse of credit ”.

The policy will make targeted and advanced moves to boost market confidence and the 7.7 percentage points reduction of leverage ratio last year has provided more room for an accommodative policy this year, Liu said.

Sun Guofeng, head of the PBOC monetary policy department, said the Loan Prime Rate will reflect the changes of market rates as monetary market rates, noting bond yields both fell after the PBOC cut its policy rates Monday. The lower LPR will reduce loan rates and lower borrowing costs for companies, he said.