PBOC joins shift to boost growth
The People's Bank of China became the 16th global central bank to ease monetary policies this year, after it reduced reserve requirements or the amount of cash banks must hold back from lending, starting from Thursday.
The PBOC said it will lower the RRR for all financial institutions by 50 basis points, making it the first broad cut since May 2012. Meanwhile, an additional targeted RRR cut will take effect for city and rural commercial banks with sufficient exposure to small and medium-sized enterprises. The RRR for the Agricultural Development Bank of China will be lowered by 450 basis points.
Though the RRR cut is more of a follow-up measure to the steps announced by other central banks, it also means that the Chinese currency is entering an era of depreciation, said Lu Zhengwei, chief economist at Industrial Bank Co Ltd.
