China cuts key rate, lowers banks' reserve ratio in bid to boost economy
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The news: China's central bank has cut its policy rate and reduced the amount of cash lenders must hold in reserve as it seeks to boost the country's economy amid a trade war with the US, news agencies reported.
The numbers: Governor of the People’s Bank of China Pan Gongsheng announced on Wednesday that it will cut the seven-day reverse repurchase rate to 1.4% from 1.5%, which will bring down the main policy rate by around 10 basis points.
It will also lower the banks' reserve requirement ratio by 50 basis points to release 1 trillion yuan ($214 billion) in liquidity.
The context: The market had been expecting Beijing to unleash further stimulus in an effort to support the economy after US President Donald Trump ramped up tariffs on Chinese goods to 145%, which prompted China to retaliate with additional 125% tariffs on imports from the US.
The announcement came hours after China and the US said representatives would meet later this week in Geneva to start trade talks.
