China's central bank said Friday it will cut the amount of cash that banks must hold as reserves from Dec. 5 in a bid to ease credit and shore up the economy that has been slowing amid the nation's strict "zero-COVID" policy.
The 0.25 percentage point reduction of the reserve requirement ratio to 7.8 percent by the People's Bank of China will pump about 500 billion yuan ($69.7 billion) of liquidity into the economy. It will be the second cut this year following the 0.25-point reduction in April.
The measure is aimed at keeping liquidity reasonably ample and lowering comprehensive financing costs, the bank said. It is expected to boost consumption and domestic investment by prompting financial institutions to lend more money to companies and other entities.
The world's second-biggest economy has been slowing, with private spending and industrial production affected by the strict COVID restrictions involving lockdowns amid the spread of infections.
Earlier this week, an executive meeting of the State Council chaired by Chinese Premier Li Keqiang decided that financial support for the real economy will be scaled up, saying monetary policy tools will be used when needed and as appropriate.
