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Nomura: The PBoC Cuts RRR By 25bp, But It Is Just Like Pushing On A String

CHINA

Nomura note that “since the State Council’s meeting memo issued on 23 November, the PBoC has announced that it will cut the reserve requirement ratio (RRR) by 25bp for all banks with a RRR above 5.0% effective 5 December. The size and timing of this cut is largely in line with market expectations and our forecast. The PBoC said that this cut will release CNY500bn in loanable funds. However, cutting the RRR now is just like pushing on a string, as we believe the real hurdle for the economy is the pandemic rather than insufficient loanable funds. In our view, ending the pandemic as soon as possible is the key to the recovery in credit demand and economic growth.”

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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