• Will maintain prudent monetary policy
  • Will keep liquidity reasonably ample
  • New RRR cut will lower capital costs for financial institutions by around ¥15 billion per year
  • Weighted average RRR for financial institutions is at 8.4% after new cut
  • New RRR cut will release ¥1.2 trillion in long-term liquidity

Nothing out of the ordinary from the PBOC. However, as the Chinese economy is already encountering some notable downside pressure, the omicron variant may threaten a bigger problem going into next year amid the country's zero-COVID policy.

In any case, we may be seeing another round of liquidity injection coming from the PBOC before the Lunar New Year holiday next year, which will fall on 1 February 2022.