The People’s Bank of China cut interest rates for the fifth time since November – this time by 25 basis points to 4.6% – and cut banks’ reserve requirement ratio by 50 basis points to 18% on Tuesday as the Shanghai stock exchange’s benchmark index fell 7.63% to end the day below the 3,000-point mark and at a level unseen since December, Reuters reported. Liu Li-Gang, China economist at ANZ Bank in Hong Kong, said the reserve requirement ratio cut was the most significant element of the central bank’s action, as it would inject RMB650 billion (US$101 billion) into the economy and ease concerns of a hard landing.
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