China central bank governor says will cut banks’ reserve requirement ratio

[BEIJING] China’s central bank governor said on Wednesday the bank would cut the amount of cash that banks must hold as reserves by 50 basis points, the first reduction in 2025 as policymakers seek to boost liquidity and prop up economic growth amid a protracted trade war with the United States.

The People’s Bank of China’s Governor Pan Gongsheng told reporters the reserve requirement ratio (RRR) will release about 1 trillion yuan (S$178.2 billion) in liquidity.

With China hunkering down for a trade war with the United States after President Donald Trump imposed triple-digit tariffs on Chinese goods, Beijing pledged to cut banks’ reserve requirement ratio “in a timely manner” at a key meeting in late April.

Pan did not say when the cut will kick in but the reduction follows two 50-bps cuts for all banks that took effect in February and September last year.

The central bank will also cut policy rate by 10 bps which will lead to a 10-bps cut to the loan prime rate, a key benchmark for setting lending rates in China. REUTERS