Mike had the news here: PBOC cuts reserve requirement ratio by 50 basis points
Some more detail:
- The People’s Bank of China is to lower the reserve ratio requirement for institutions servicing agriculture and small business by 50 basis points
- Said liquidity conditions remain ample and the overall monetary stance won’t change
- Thecut takes effect June 16
- It will effect around two thirds of city commercial banks and 80% of rural commercial banks
- Reserve ratios for finance companies, financial leasing firms and auto finance companies will also be lowered by 50 basis points (i.e those that that disburse consumer or auto loans)
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The move highlights the government’s intent to selectively target policy in sections of the real economy deemed most in need of assistance
It’s a selective approach, and is to avoid increasing credit supply for all businesses.
This is the second selective cut to the RRR since April – the previous last time was on April 25, when the PBOC cut between 50-200 basis points that applied only to rural banks. Banks which already had their reserve requirements eased on April 25 would not be eligible for this reduction.
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