China's central bank to trim reserve requirements

(Sharecast News) - China's central bank is to cut the amount of cash lenders must hold, it was confirmed on Wednesday, the latest move designed to bolster the country's ailing economy. Pan Gongsheng, governor of the People's Bank of China, said the reserve requirement ratio would be trimmed for all banks from 5 February, by 50 basis points to 10%.

Speaking at a press conference, Pan added that the move would free up ¥1trn. It is the third time the PBoC has trimmed the RRR, following two reductions last year.

The central bank also pledged to cut key re-lending and re-discount interest rates by 25bps this week.

China's economy has struggled in recent years, hit by Beijing's stringent zero-Covid policy, the crisis engulfing the property sector and slowing global demand.

The authorities are therefore increasingly looking at ways to stimulate the economy.

On Tuesday, Beijing said it was considering a £220bn rescue package for Chinese stock markets, which have struggled compared to other benchmarks worldwide.