The Chinese central bank announces a cut to its reserve requirement ratio
- Will further cut RRR for some qualified banks
- Additional reduction for said banks will be up to 100 bps or 1.00%
- Targeted reduction for qualified banks will be via two phases of 50 bps cut each
- RRR cuts to release about ¥900 billion in liquidity
- Reiterates that will continue to implement prudent monetary policy
In their recent comments, Chinese officials have been hinting at a possible move and they're now delivering on that. This should underpin Chinese assets further as authorities keep up their efforts to try and bolster the economy.
For some context, China has reduced its RRR twice already this year (one in January and one in May) after three rounds of cuts in 2018. If anything else, don't expect this to be the last one either given global macro developments.
A couple of heads up to the matter during the week:
