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MNI: Chances Rise PBOC Cuts RRR As Gov Debt Issuance Increases

MNI (Singapore)
(MNI)Beijing

Beijing will accelerate debt issuance in Q2 and Q3, necessitating additional liquidity support from the central bank.

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The People’s Bank of China will consider cutting the reserve requirement ratio as soon as this quarter as it aims to support the accelerated issuance of government bonds while enhancing control over idle funds, policy advisors and economists told MNI.

An RRR cut in Q2 will help the central bank meet medium- and long-term liquidity needs, reduce financial institutions funding costs and create a more favourable liquidity environment, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance, pointing to the Politburo’s unexpected call to use the RRR tool, alongside other easing measures, at the April 30 meeting.

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The People’s Bank of China will consider cutting the reserve requirement ratio as soon as this quarter as it aims to support the accelerated issuance of government bonds while enhancing control over idle funds, policy advisors and economists told MNI.

An RRR cut in Q2 will help the central bank meet medium- and long-term liquidity needs, reduce financial institutions funding costs and create a more favourable liquidity environment, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance, pointing to the Politburo’s unexpected call to use the RRR tool, alongside other easing measures, at the April 30 meeting.

Keep reading...Show less