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PBoC to ensure ample liquidity through RRR cuts

27 Feb 2020 11:36 AM

China's central bank said today that it will ensure ample liquidity by reducing the targeted reserve requirements rate in a timely manner and will keep monetary policy prudent and flexible to support the economy.

China has announced a series of steps in recent weeks to boost investor confidence and help keep small businesses as the Coronavirus epidemic severely disrupts economic activity.

Many analysts believe that more support measures are likely to be taken soon as the unrest appears to extend into the second quarter. Recent surveys have shown that one-third of the country's small businesses have only enough cash for a month, and another third believe they can hold out for two months.

The Deputy Governor of the People's Bank of China said at a press conference in Beijing that the central bank will reduce as much as possible the impact of the epidemic so that this year's economic goals can be achieved, adding that more long-term liquidity will be released through multiple open market operations. Also targeted reserve requirements will be reduced in suitable time for banks, in order to meet the requirements of the release of inclusive loans and to serve small businesses.

The central bank said yesterday that another 500 billion yuan will be released to banks to provide cheap loans to small and medium-sized enterprises, in addition to the 300 billion yuan announced earlier this month for loans to companies that manufacture health supplies, such as masks and protective suits.

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