China Cuts Reserve Ratio

The People's Bank of China cut the reserve requirement ratio for financial institutions by 25bps on March 17th 2023, effective from March 27th.

It is the first rate cut in banks' reserve ratio since December, in an attempt to stimulate the economy, keep liquidity reasonably ample and better supply key areas, weak links.

The RRR for big banks now stands at 10.75%, a fresh low since mid-2007 while the weighted average ratio for financial institutions stands at around 7.6%.

The move was in line with market expectations, after PBoC governor Yi Gang recently said that "a reduction in the reserve requirement ratio would be an effective way to inject liquidity", but also noticed that there was limited room for policy rate cuts.