China Cuts RRR, Short-Term Rates to Spur Growth

The People's Bank of China (PBoC) lowered the reserve requirement ratio (RRR) for banks by 50bps, the second reduction this year aimed at bolstering a stuttering economy.

The change, which takes effect today, Sept.

27, was signaled earlier in the week by Governor Pan Gongsheng, bringing the weighted average RRR to 6.6%.

This move will free up about CNY 1 trillion in new lending, with the central bank leaving room for another cut this year.

Additionally, the PBoC trimmed the 7-day reverse repo rate by 20bps to 1.5%.

This rate is used to determine the nation's key lending rates.

It also stated interest rates for 14-day reverse repos, as well as temporary repos and reverse repos, will continue to be adjusted in line with changes to the 7-day reverse repo rate.

China has ramped up the rollout of policy initiatives this week, with its top decision-making body, the Politburo, pledging to introduce further fiscal and monetary support measures to prevent further deterioration of the economy.