September 6, 2019 9:35 PMBEIJING: China’s central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan in liquidity to shore up the flagging economy.
The broad-based cut, which will release 800 billion yuan in liquidity, is effective Sept 16. The additional targeted cut will release 100 billion yuan, in two phases effective Oct 15 and Nov 15. The PBOC said it will maintain a prudent monetary policy and avoid flood-like stimulus, while increasing counter-cyclical adjustments and maintaining reasonable and abundant liquidity.
“I think it’s very likely they will cut the LPR by about 5-10 bps later this month. I also expect another RRR cut of 50 bps by the end of this year,” Macquarie’s Hu said.Despite a slew of support measures and policy easing since last year, China’s economy is still struggling to get back on firm footing.
But analysts have cautioned that some companies may be merely refinancing existing debt at better rates, rather than borrowing to fund fresh investments.
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