China cuts banks’ reserve requirement to aid recovery

The news: China’s central bank will cut the amount of cash that banks must hold as reserves to boost liquidity and support the country's economic recovery.

The numbers: The People's Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points from 15 Sept. The move is expected to free up over 500 billion yuan ($107 billion) for medium to long term liquidity.

The context: The latest cut is the second time this year China’s central bank has reduced the reserve ratio and follows a 25-basis points cut for all banks in March. It comes as the world's second-biggest economy struggles to sustain a post-pandemic recovery in the face of sluggish demand. The government has rolled out a series of policy measures in recent months, including steps to spur housing demand. China will release key economic figures for August including retail sales, industrial output and property investment later on Friday.