China Monetary Policy


People's Bank of China eases monetary policy

On 18 February, the People's Bank of China (PBOC) cut the reserve requirement ratio (RRR) for the second time in three months by 50 basis points to 20.5% for large banks and to 18.5% for small lenders. The move aims at boosting bank lending amidst cooling global demand and slowing domestic economy, and is expected to inject as much as CNY 400 billion (USD 63 billion) of liquidity in the banking system. In the last few months, authorities have become increasingly concerned about economic growth rather than inflationary pressures stemming from the massive stimulus program launched in 2009-2010. In this regard, on 13 February, Premier Wen Jiabao stated that the fine-tuning of economic policies, which seeks to spur growth, will begin in this quarter.

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