China has announced a cut to its Reserve Requirement Ratio (RRR) by 50 basis points from Monday, January 6. The New Year’s announcement may turn positive for risk assets after traders return to their desks.
The People’s Bank of China’s move is set to allow banks to lend an additional $115 billion, thus providing stimulus to the world’s second-largest economy. Big banks will now be required to hold reserves of 12.5% of their assets, while smaller institutions are now limited to 10.5%.
Authorities in Beijing laid the ground to this move and are keeping the door open to additional easing.
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