Mark Williams, a London-based economist at Capital Economics Ltd., comments on China’s monetary policy after the nation cut the amount of cash that banks must set aside as reserves for the first time since 2008.
Reserve ratios will decline by 50 basis points effective Dec. 5, the People’s Bank of China said in a statement on its website today. Before the announcement, the level was a record 21.5 percent for the biggest lenders, based on previous PBOC statements.
“This is a clear signal from China’s policy makers that they are changing direction. Further reserve-requirement cuts will follow over the next few months and we can expect to see a significant rebound in lending as well to counter the economic slowdown.”
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