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China Reserve-Ratio Cut Signals Growth Is Priority Over Yuan

  • Measure drops to 17% for biggest banks; still high globally
  • Move comes days before leaders unveil 2016 expansion goal
Bloomberg business news

Is China's Reserve-Ratio Cut a Game Changer?

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China’s latest easing move signals that shoring up growth is the government’s top priority even if doing so further weakens the yuan or adds to leverage that threatens the longer-term health of the world’s second-biggest economy.

The People’s Bank of China said Monday that it’s cutting the amount of cash the nation’s lenders must lock away. The move marked the first time in four months that the central bank has used one of its traditional monetary-easing tools, despite mounting signs of a weaker economy and a stock market in near-freefall. The official factory gauge released Tuesday extended its stretch of deteriorating conditions to a record seven months.