Business / Economy

Short-term RRR cut less likely in China

(Xinhua) Updated: 2012-08-22 15:11

BEIJING -- The possibility of a further drop in Chinese banks' reserve requirement ratio in the short term has lessened following the central bank's record reverse repurchase operation on Tuesday, the China Securities Journal reported on Wednesday.

The reverse repurchase operation, which totalled 220 billion yuan ($34.9 billion), also marked a record daily high. Offsetting 87 billion yuan due this week, the central bank has made a net liquidity injection of 133 billion yuan this week, the report said, citing data from Wind, a financial information provider.

The report said Tuesday's open market operation has significantly bettered market expectations. It also dampened short-term expectations for a fresh cut of the RRR, which has not materialized even though the market has anticipated it for a long while.

In a bid to boost the economy, the central bank lowered the RRR for banks in February and again in May. The country's new yuan-denominated lending last month also declined sharply to 540.1 billion yuan, the lowest since September 2011. This compares to new loans of 919.8 billion yuan in June, central bank data showed.

Hot Topics

Editor's Picks