The Peoples Bank of China, made an unscheduled announcement to cut the reserve requirement ratio (RRR) by 50bps to 19.5%. The announcement follows a wave of central banks cuts in January, in an attempt to fuel growth.
The PBoC cut reduces the amount of cash banks are required to hold in reserve, in an attempt to stimulate the economy, or at least keep the economy stable. Concerns from analysts that the Chinese growth levels fuelled by credit were unsustainable have been noted continuously over the last 5 years. GDP is officially estimated at 7.4%, down from 7.7% in 2013, and significantly lower than double digit levels seen a few years back.
*CHINA RRR CUT MAY RELEASE OVER 600B YUAN LIQUIDITY: LIU— Guy Johnson (@GuyJohnsonTV) February 4, 2015