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China Faces a Bleaker End to 2018 as Central Bank Cuts Reserve Ratio Again

  • Move releases $175 billion; some earmarked for PBOC repayment
  • Step raises questions on how PBOC will avoid weaker yuan
Bloomberg business news
Alicia Garcia-Herrero, chief APAC economist at Natixis, discusses China cutting its RRR rate.(Source: Bloomberg)
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China’s central bank cut the amount of cash lenders must hold as reserves for the fourth time this year, as policy makers seek to shore up the faltering domestic economy amid a worsening trade war.

The People’s Bank of China lowered the required reserve ratio for some lenders by 1 percentage point, effective from Oct. 15, according to a statement on its website Sunday. The cut will release a total of 1.2 trillion yuan ($175 billion), of which 450 billion yuan is to be used to repay existing medium-term funding facilities which are maturing, the central bank said.