The People’s Bank fo China (PBOC) has announced a cut in its Reserve Requirement Ratio (RRR) of 0.50% from Monday, September 16.
Some banks will enjoy a double-dose of reduction – 100 basis points in two phases. Beijing estimates that the cut will unleash around 900 billion yuan – around $128 billion of liquidity into the economy.
The move will allow banks to lend more and stimulate the world’s second-largest economy and positively impact other economies.
China’s action may boost stock markets and commodity currencies such as the Australian dollar.