People’s Bank of China Cuts Reserve Requirement Ratio by 50bps30 November, 2011, 19:17. Posted by Zarathustra
Tags: Economy, People's Bank of China
People’s Bank of China just cuts the reserve requirement ratio by 50 basis points, effectively from 5 December 2011. The last time when the RRR was changed was 14 June, which was a hike of RRR by 50 basis points. RRR for large banks are currently standing at 21.5%, so the 50 basis points cut would reduce the RRR to 21%.
I do not think that this move is very dramatic in the face of the deterioration of the global macro picture. It has been highlighted here earlier that foreign exchange reserve fell in September, and there are evidence that hot money is flowing away from the country, tightening monetary condition. Thus a RRR cut would probably aim at offsetting some of the recent development.