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Relaxed credit makes little impact on housing

Updated: 2012-02-25 08:27
By Yi Xianrong ( China Daily)

The 50-basis-point cut in the reserve requirement ratio for commercial banks by the People's Bank of China on Friday, which is taken as a move to ease credit restrictions, will unlikely produce much of an impact on the country's struggling housing market.

The central bank's cut in the amount that banks must hold in reserve will bring the ratio to 20.5 percent for large banks and 17 percent for small and medium-sized ones. Estimates said that about 400 billion yuan ($64 billion) of liquidity capital could be released following the reduction.

Amid a drastic decline in the country's funds outstanding for foreign exchange and domestic commercial banks being plagued by lending insufficiency, the market has been anticipating such a move since the central bank's last cut that took effect on Dec 5, the first reserve reduction in three years. Expectations remained particularly high around the country's Lunar New Year on Jan 22. The later-than-expected announcement by the monetary authorities reflects its cautious manner in pushing for monetary policy adjustments.

Relaxed credit makes little impact on housing