Skip to content
Subscriber Only

PBOC Sets Policy Pace for 2020 With Reserve Cut to Aid Credit

  • PBOC to add $115 billion to banks in reserve ratio cut
  • Move will likely lower loan prime rate and make credit cheaper
Video player cover image
PBOC Will Keep Its Accomodative Stance, Says BBVA’s Xia
Updated on

China’s central bank trimmed the amount of cash that lenders must hold in reserve, and signaled continued action in 2020 to reduce borrowing costs for companies.

The required reserve ratio for commercial lenders will be lowered by 50 basis points from Jan. 6, releasing about 800 billion yuan ($115 billion) of liquidity into the financial system, the People’s Bank of China said on its website Wednesday. The cut aims to help banks reduce their lending rate to businesses, the PBOC said in a separate statement. Currently, the required reserve ratio is 13% for big banks and 11% for smaller ones.