- Almost half of surveyed economists predict the central bank will lower the reserve-ratio nationwide this year.
- This comes after it was lowered for some rural banks
- The tool unleashes about $80 billion of liquidity into the banking system for every half percentage-point reduction
“The changing monetary-policy regime means the reserve ratio has a more material impact because it impacts liquidity in the interbank market,” said Yao Wei, China economist at Societe Generale SA in Hong Kong, who forecasts a half-point cut this quarter. “That changes the interest rates that actually matter.”
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