To shore up the development of the real economy and steadily bring down overall financing costs, the People’s Bank of China (PBC) is scheduled to cut the required reserve ratio (RRR) for financial institutions by 0.25 percentage points (excluding those that have already implemented an RRR of 5 percent) on April 25, 2022. To ramp up the support for micro and small businesses (MSBs) and agriculture, rural areas and farmers, urban commercial banks running businesses within the province of registration and rural commercial banks implementing an RRR of over 5 percent will enjoy an additional RRR cut of 0.25 percentage points. The weighted average RRR for financial institutions will be 8.1 percent after the cut.
The PBC will put stability in the first place and pursue progress while maintaining stability. It will continue to implement a sound monetary policy, refrain from a deluge of strong stimulus policies, strike a balance between internal and external equilibria, and give better play to both aggregate and structural policy instruments. The PBC will keep the liquidity adequate at a reasonable level and keep the growth of money supply and the aggregate financing to the real economy (AFRE) basically in line with the nominal GDP growth. It will also invigorate the market and support the financing of major areas and weak links, so as to create a favorable monetary and financial environment for the high-quality development and the supply-side structural reform.
