In order to consolidate and strengthen the upward trend of economic recovery, the People’s Bank of China (PBOC) is set to cut the required reserve ratio (RRR) for financial institutions by 0.5 percentage points (excluding the financial institutions that have already implemented an RRR of 5 percent), which will be effective from February 5, 2024. The weighted average RRR for financial institutions will be about 7.0 percent after the cut. In addition, the PBOC is scheduled to cut the interest rate on central bank lending for rural development, the interest rate on central bank lending for micro and small businesses (MSBs), and central bank discount rate by 0.25 percentage points, respectively, starting from January 25, 2024.
The PBOC will fully implement the guidelines of the Central Economic Work Conference and the Central Financial Work Conference. Conscientiously carrying out the decisions and arrangements of the CPC Central Committee and the State Council, it will pursue a sound monetary policy that is flexible, appropriate, targeted and effective. The PBOC will intensify macro adjustments, strengthen the counter-cyclical and inter-temporal adjustments, and keep the liquidity adequate at a reasonable level. It will align the aggregate financing to the real economy (AFRE) and money supply with the economic growth and expected price levels. It will also maintain the RMB exchange rate basically stable at an adaptive and equilibrium level. With these efforts, the PBOC aims to effectively upgrade and appropriately expand the economic output in a continuous manner.
