Understanding China's Latest RRR Cut
It's different from the past, but it's still connected to the balance of payments.
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The People’s Bank of China (PBOC) is lowering banks’ required reserve ratio (RRR) by 0.5 percentage points. According to the PBOC, “the aggregate liquidity in the banking system will remain basically stable,” which means this probably isn’t a move meant to boost the domestic economy. The PBOC also notes that “the RRR reduction aims to improve the fundin…