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China cuts RRR by 50 basis points

Updated: Feb 5,2015 7:52 AM     Xinhua

[Image by Kang Chao/]

BEIJING — China will lower banks’ reserve requirement ratio (RRR) by 50 basis points starting Feb 5, the country’s central bank said on Feb 4.

Meanwhile, to step up financial support to some targeted areas, the central bank decided to cut the RRR by an extra 50 basis points for certain commercial banks engaged in proportionate lending to small and micro-sized enterprises, the farming sector as well as major water projects.

The Agricultural Development Bank of China, the sole policy lender for agriculture, gets an RRR reduction of 4 percentage points.

Currently, big banks must hold 20 percent of their deposit as reserve, while the ratio for small and medium-sized banks is 16.5 percent.

The move follows widespread expectations for the central bank to stimulate the flagging economy, as growth last year fell to its lowest level since 1990.

Data released on Feb 1 showed the purchasing managers’ index, a main gauge of manufacturing activity, fell below the 50-point mark for the first time since October 2012, in a sign of continued weakness in the economy.