PBOC: No change to “prudent policy bias”

Advertisement
china-slow-down-red-flag-sign

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.
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.