The People’s Bank of China (PBC) announced on September 6 that it has decided to lower the required reserve ratio (RRR) for financial institutions by 0.5 percentage points on September 16, 2019 (excluding finance companies, financial leasing companies, and auto finance companies), aiming to further support the development of the real economy and lower financing costs.
In addition, in an effort to increase the support for micro and small businesses and private enterprises, rural commercial banks operating solely within provincial administrative regions will additionally enjoy a targeted cut of 1 percentage point in the required reserve ratio. The reduction will be implemented on October 15 and November 15 of 2019, with a cut of 0.5 percentage points each time.
Accordingly, the RRR cut will release about RMB 900.0 billion ($127.0 billion) in long-term funds, though the PBC mentioned it will continue to implement the sound monetary policy.
The RRR cut will likely boost the economic development in China and accelerate the demand for finished steel.