BEIJING: China has recently rolled out a powerful combination of monetary easing measures as part of efforts to bolster market sentiment and support economic recovery amid domestic downward pressure and mounting global headwinds.
The policy package, which includes trimming the reserve requirement ratio, key policy interest rates and existing mortgage loan interest rates, is seen as a potent one-two punch to foster a more conducive environment for the world’s second-largest economy to achieve its annual growth target, according to analysts.
The latest macroeconomic data, which indicates a relatively soft rebound in consumption and tame inflationary dynamics, have provided policymakers with greater flexibility to roll out more targeted measures to stimulate economic activity, said Ming Ming, chief economist at CITIC Securities.
The People’s Bank of China, the country’s central bank, announced in late September the lowering of the reserve requirement ratio — the amount of cash that banks are required to have on hand — for financial institutions by 0.5 percentage points, except those that have already implemented a 5 percent reserve ratio.
This latest RRR reduction, coming after a similar 0.5 percentage point cut in February, is expected to provide the market with approximately 1 trillion yuan ($141 billion) for new lending. Following this reduction, the weighted average RRR for financial institutions is expected to be around 6.6 percent. –The Daily Mail-China Daily news exchange item
