BEIJING (Reuters) -China will cut banks’ reserve requirement ratios (RRR) “in a timely way”, state media on Friday quoted Premier Li Keqiang as saying, as the world’s second largest economy faces strengthening headwinds.
China will “cut reserve requirement ratios in a timely way to step up support for the real economy, especially small and micro firms, to ensure stable and healthy economic operations,” Li was quoted as saying during a meeting with International Monetary Fund chief Kristalina Georgieva via video link.
He said China will implement steady economic polices and make the policies more targeted and effective, while maintaining its prudent monetary policy and keeping liquidity reasonably ample.
Since a broad-based cut to reserve ratios – the amount of cash that banks must hold as reserves – in July, the central bank has defied market expectations for further policy easing, and Chinese leaders have ruled out aggressive stimulus.
Hu Yifan, regional chief investment officer and chief China economist at UBS Global Wealth Management, said this week she expected the central bank to cut reserves banks are required to hold by Lunar New Year, in early February.
But some analysts believe an easing step could come sooner.
“A near-term RRR cut is possible,” said Tang Jianwei, senior economist at Bank of Communications in Shanghai.
“The downward pressure on the economy is relatively big, dragged by a weakening property market.”
The RRR for large banks, after taking into consideration the preferential policy of targeted cuts for inclusive financing, is at 10.5%
Advisers to China’s government will recommend authorities set a 2022 economic growth target below the one set for 2021, giving policymakers more room to push structural reforms.
China’s multiple headwinds heading into 2022 include the fallout from a property downturn and from strict COVID-19 curbs that have impeded consumption and slowed the impressive rebound from last year’s pandemic slump.
Source: Economy - investing.com
