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RRR Cut To Ease Holiday Liquidity Gap

CHINA PRESS
MNI (Singapore)

The People’s Bank of China’s greater-than-expected cut to the reserve requirement ratio by 50bp will help boost the economy, ease liquidity pressure before the Chinese New Year and stabilise the capital market, 21st Century Business Herald reported citing analysts. While the cut is expected to release CNY1 trillion of long-term funds, some institutions estimate the liquidity gap may exceed CNY2 trillion before the holiday, as the order of social life has returned to the pre-pandemic level. After the cut, the benchmark Loan Prime Rate is also expected to be lowered in February, alongside the reductions in banks’ deposit interest rates since last December.

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