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Banking & Finance

China slashes banks' reserve ratios to boost lending

Latest cut the seventh since early 2018 as authorities tackle slowing economy

The People's Bank of China says the broad-based cut will be effective Sept. 16.   © Reuters

BEIJING (Reuters) -- China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing a total of 900 billion yuan ($126.35 billion) in liquidity to shore up the slowing economy.

The People's Bank of China (PBOC) said on its website that it would cut the reserve requirement ratio (RRR) by 50 basis points (bps) for all banks, with an additional cut of 100 bps for some qualified banks.

The PBOC has now cut RRR seven times since early 2018.

The broad-based cut will be effective Sept. 16. The additional targeted cut will be in two phases, effective Oct. 15 and Nov. 15.

Despite a slew of support measures and policy easing since last year, China's economy is still struggling to get back on firm footing. July's data showed growth stumbled more sharply than expected as the intensifying trade war with the United States took a heavier toll on businesses and consumers.

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