From ForexLive:
- People’s Bank of China (PBOC) will cut the deposit reserve requirement for rural financial institutions: 2% cut for rural commercial banks and a 0.5 percentage point cut for rural cooperatives
- Will take effect from Friday
- This takes the reserve requirement for rural commercial banks to 15%; rural cooperatives to 13% (compared to most large Chinese institutions, required to maintain a 20% deposit reserve ratio)
- Note: From MNI, quoting an unnamed source: “In 2010, the PBOC launched the differential management of the reserve requirement for banks. This reserve cut for county and town rural financial institutions is just a continuation of that policy”
Source further said that, a system-wide reserve cut in the current quarter is “unlikely”:
- PBOC said in a statement that the cut is designed to support agriculture and “doesn’t suggest any change in the prudent monetary policy bias.”
- Analysts estimate that the cut may release as little as CNY50 billion into the economy.