People’s Bank of China (PBOC) announced a cut in the RRR

Beijing: On Friday, The People’s Bank of China (PBOC) announced a cut in the reserve requirement ratio (RRR) of banks, and benchmark interest rates.

Xinhua news agency reported, effective Saturday, the RRR for financial institutions will be slashed by 0.5 percentage points to further reduce the cost of financing.

The PBOC announced, the RRR for qualified financial institutions reinforcing small and micro businesses and agriculture will be lowered by another 0.5 percentage points.

Benchmark interest rates will also be down to ensure reasonably adequate liquidity in the banking system.

The PBOC said, from Saturday, interest rates for one-year lending and deposits will be cut by 0.25 percentage points to 4.35 percent and 1.5 percent respectively.

Meanwhile, the central bank announced it would vanish the upper limit of the floating range of interest rates for deposits in commercial banks and cooperative financial institutions in rural areas, amid efforts to enhance the market-oriented formation mechanism of interest rates.

The PBOC explained, as China’s economy continues to slow and global financial markets fluctuate, these moves target to produce a sound financial environment for restructuring and steady growth of the economy.