On Sunday evening the People’s Bank of China cut the RRR by 1%

  • to 18.5%
  • The second industry-wide cut in just two months (RRR was cut for all banks by 50 basis points on February 4, the first industry wide reduction since May 2012)
  • The PBOC has also cut official interest rates twice since November
  • Its expected to release around 1 trillion yuan ($208 billion) of capital into the economy
  • In an effort to boost lending outside the major urban areas, the PBOC allowed an additional 100 basis point cut for rural credit unions and village banks
  • It also allowed the Agricultural Bank of China, a major policy bank, to cut its RRR by 200 basis points

The size of the cut is much larger than economists and analsysts had been expecting and will raise concerns about the growth outlook ... From the PBOC statement on the cut:

"Though growth in the first quarter met the official target of around 7 per cent for 2015, the slowdown in industrial output and retail sales has caused concern"