China’s
central bank cut the amount of cash that banks must hold as reserves on
Saturday, pumping out more funds that could be used for lending to head
off sharper slowdown in the world’s second-largest economy.
The People’s Bank of China delivered a 50-basis-point cut in banks’ reserve requirement ratio (RRR), effective from May 18.
The
latest RRR cut – the third in six months — came a day after a flurry of
data showed that the world’s second-largest economy was slowing faster
than expected, with industrial production weakening sharply in April and
investment slowing to its lowest level in nearly a decade.
Meanwhile China’s annual inflation rate for April moderated to 3.4 percent in April from 3.6 percent in March.
The
cut in bank reserves also comes as bank lending in April came in at a
disappointing 681.8 billion yuan ($108.04 billion), lower than the 800
billion forecast, which raised doubts on whether Beijing has money
supply settings sufficiently loose to keep the economy on an even keel.
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