Chinese CB Increases Stimulus by Cutting Bank’s Reserves

China’s central bank increased its economic stimulus measures even further Wednesday amid growing concerns about the rate of expansion in the world’s second-largest economy.

The People’s Bank of China (PBOC) decided to cut banks’ reserve requirement ratio (RRR) by 50 basis points to 19.5 percent. The move, effective Thursday, is the first such cut since May 2012. This will lower the amount of deposits that each lender is required to hold as reserves.

The measure will help keep the economy stable, the PBOC said alongside the decision which was announced around 10:30 a.m. GMT. It added that it will also help guide the appropriate growth in social financing.

Asian markets were closed during the announcement but their European counterparts received a boost on the news. Mining stocks like Fresnillo, which have a heavy exposure to China, rallied on the announcement as did Asian exposed lenders like Standard Chartered.

Australian and New Zealand, whose economies are heavily reliant on the Chinese economy, saw their currencies lift on the news.

via CNBC

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