Central bank announces reserve ratio cuts to boost liquidity


China's central bank announced on Friday it would inject 550 billion yuan ($78.67 billion) of liquidity into the economy by cutting the cash amount commercial banks must reserve to stabilize market sentiment and support economic growth amid the novel coronavirus outbreak.
The cut of the reserve requirement ratio will take effect on Monday, lowering the RRR by 0.5 to 1 percentage points for a certain group of banks satisfying requirements for lending more to smaller businesses. A further cut of 1 percentage point will be prescribed for some joint stock commercial banks to encourage more credit into non-financial sectors, according to a statement from the People's Bank of China, the country's central bank.
The most recent RRR cuts came on Jan 6, through which the ratio for big banks was reduced to 12.5 percent from 13 percent, and for small and medium-sized banks to 10.5 percent from 11 percent, according to the PBOC.
The monetary authorities reconfirmed the country's monetary policy will remain prudent, but more flexible and moderate. The monetary policy will put economic recovery "in a more prominent position" without taking a "flood irrigation type" approach to easing, and to balance the economic situations at home and abroad.
The central bank also stressed it would keep ample liquidity at a reasonable level, and match the growth of credit and aggregate financing in line with economic growth.