China has announced a significant step to stimulate lending and address economic challenges. According to the People’s Bank of China Governor Pan Gongsheng, the reserve requirement ratio (RRR) will be reduced by 0.5 percentage points on February 5, injecting a substantial “1 trillion yuan ($140 billion) of liquidity” into the market.
This decision is a response to various economic headwinds, including a prolonged crisis in the property sector, sluggish domestic consumption, and weakening foreign demand.
The move follows China’s last RRR cut in September, which lowered it by 0.25 percentage points to approximately 7.4 per cent.
Additionally, further policies to support the struggling property sector are expected to be unveiled tomorrow.