China Cuts Reserve Requirement Ratio
April 17 2018 - 3:42AM
RTTF2
China's central bank lowered the reserve requirement ratio for
most commercial banks on Tuesday, to free up funds for lending and
improve liquidity as the economy sustained growth momentum in the
first quarter.
In a statement, the People's Bank of China said it reduced the
ratio of cash that banks should hold as reserves, by 100 basis
points, with effect from April 25. The rate is currently at 17
percent and 15 percent.
The central bank said banks could utilize the funds released due
to the RRR cut to repay borrowing from the PBoC.
The central bank also required financial institutions to provide
loans to small and micro businesses and to lower funding costs.
In order to prevent financial risks, the bank noted that it is
necessary to maintain a relatively high reserve requirement
ratio.
The stable and neutral monetary policy will remain unchanged,
the bank added.
Data released earlier in the day showed that the economy
expanded at a steady pace of 6.8 percent in the first quarter of
2018, helped by consumer spending amid moderation in industrial
output and fixed asset investment growth.
However, the government targets slower growth of about 6.5
percent for the whole year as it intends to bring stability in the
financial system and curb corporate debt and combat pollution.
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