China’s central bank will cut the amount of cash that banks must hold as reserves from Feb. 5, governor Pan Gongsheng said on Wednesday, the first such cut for the year as policymakers extend efforts to shore up a fragile economic recovery, reports Reuters. Pan said the People’s Bank of China (PBOC) would cut the reserve requirement ratio (RRR) for all banks by 50 basis points (bps).
The move will free up RMB 1 trillion ($139.45 billion) to the market, the central bank chief said at a press conference in Beijing.
The PBOC will also cut re-lending and re-discount interest rates by 25 basis points for the rural sector and small firms from Jan 25. The reduction follows earlier cuts of 25 bps for all banks in September and March last year.