PBOC Lowers Required Reserve Ratio by 50 Basis Points
Posted on 01/06/2020
The People’s Bank of China (PBOC) decided to go ahead with a lower reserve requirement ratio (RRR) for financial institutions. The measure to lower the RRR by 50 basis points will inject around 800 billion RMB (US$ 114,750,000,000) into the market.
Furthermore, the PBOC decided to skip reverse repos. A reminder that a reverse repo is when the central bank purchases securities from commercial banks through bidding with an agreement to quickly sell them back.
The lowering of RRR reduces financing costs for the real economy.
There is a scheduled issuance of special local government bonds pending in January and February 2020.
