China central bank will cut banks' reserve requirement ratio, governor says
China's central bank will reduce the reserve requirement ratio (RRR) by 50 basis points, releasing approximately 1 trillion yuan ($138 billion) in liquidity to support economic growth amid ongoing trade tensions with the U.S. This marks the first RRR cut of 2025, following previous reductions in 2024. Additionally, the central bank plans to lower the policy rate by 10 basis points, which will also affect the loan prime rate, a key lending benchmark in China.
By Kevin Yao and Joe Cash
BEIJING, May 7 (Reuters) - China’s central bank governor said on Wednesday the bank will cut the amount of cash that banks must hold as reserves by 50 basis points, the first reduction in 2025 as policymakers seek to boost liquidity and prop up economic growth amid a protracted trade war with the United States.
The People’s Bank of China’s Governor Pan Gongsheng told a news briefing the reserve requirement ratio (RRR) will release about 1 trillion yuan ($138 billion) in liquidity.
With China hunkering down for a trade war with the United States after President Donald Trump imposed triple-digit tariffs on Chinese goods, Beijing pledged to cut banks’ reserve requirement ratio “in a timely manner” at a key meeting in late April.
Pan did not say when the cut will kick in but the reduction follows two 50-bps cuts for all banks that took effect in February and September last year.
The central bank will also cut policy rate by 10 bps which will lead to a 10-bps cut to the loan prime rate, a key benchmark for setting lending rates in China. ($1 = 7.2164 Chinese yuan)
