RRR cuts to ease liquidity conditions

New steps likely to prevent slowdown in base money growth

The decision of the People's Bank of China to cut reserve requirement ratios for lenders by 50 basis points will help mitigate liquidity risks and prevent a slowdown in base money growth amid increased capital outflows, leading economists said on Thursday.

Wang Tao, chief China economist at Swiss bank UBS AG, estimated that China's net capital outflows exceeded $160 billion in the fourth quarter of last year, accounting for more than half of the total outflows in 2014, as the US dollar continued to strengthen in recent months.