Economy Mar 16

China's central bank makes targeted RRR cuts

Move releases 550-billion yuan into long-term funds to bolster the 'real economy'

China central bank makes targeted RRR cuts
China's central bank has moved to boost the economy with today's RRR cuts. Photo: AFP

(ATF) – The People's Bank of China (PPC), China’s central bank, implemented targeted Required Reserve Ratio (RRR) cuts of 0.5 to 1 percentage points on Monday, in addition to an additional one percentage point for eligible joint-stock commercial banks. 

The targeted reserve cuts released a total of 550 billion yuan (about US$78.5 billion) in long-term funds. 

A report by Xinhua earlier said the PBOC’s move is aimed at shoring up the real economy and lowering the actual costs of financing.

It is believed that the targeted reserve cuts through the transmission of banks will help to reduce the real interest rates of loans to small, micro and private enterprises and directly support the real economy.

The PBOC will attach greater importance to facilitating the recovery of the real economy and refrain from indiscriminate massive stimulus, a report by Xinhua said.

Early trading sees funds outflow

Meanwhile, the net outflow of northbound funds exceeded 3 billion yuan (about $428 million) in early morning trading on Monday, of which the net outflow of deep stocks was about 1.8 billion yuan ($257 million). 

Fixed asset investment down

China's fixed asset investment – excluding rural households – was 3.332 trillion yuan (about $476 billion), down 24.5% from the same period last year.

Private fixed asset investment was 1.8938 trillion yuan (about $270.5 billion), down 26.4% from the same period last year.

Fixed asset investment (excluding farmers) fell by 27.38% month-by-month in February.