MNI POLICY: PBOC Cuts Bank Reserve Ratios, Unlocks CNY550 Bln

     BEIJING (MNI) - The People's Bank of China (PBOC) cut selected banks'

reserve requirement ratios Friday, releasing CNY550 billion into the system to

shore up the virus-hit economy. 

     The central bank lowered RRRs by 0.5 to 1 percentage point, the second move

this year, allowing banks to meet their annual assessment criteria for enforcing

inclusive finance policy, expected to release CNY400 billion, according to a

statement on its website. 

     Qualified joint-stock commercial banks will receive another 1 pp cut,

releasing another CNY150 billion, according to the statement. Banks receiving

the cut must lower loan rates "markedly" to expand credit to small and

medium-sized private companies, the PBOC said. 

     All cuts will take effect on March 16, the PBOC said. The central bank is

making its prudential monetary policy more flexible and appropriate, further

prioritizing the restoration of the real economy, to keep liquidity ample while

avoid excessive liquidity, according to the statement.

     The RRR cuts can directly reduce the cost of banks' interest payments by

about CNY8.5 billion each year, thus helping reduce SMEs' borrowing costs, the

PBOC said. 

     The PBOC's announcement today, the first since a 0.5 pp RRR cut on Jan. 6,

was widely expected by the market. It followed easing moves by the U.S. Federal

Reserve and other central banks responding to the global spread of the

coronavirus outbreak.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MMQPB$,M$A$$$,M$Q$$$]