The People's Bank of China (PBOC) said that to support the country's economy, which is under pressure due to the outbreak of coronavirus and related restrictions, from December 5, the reserve requirement rate (RRR) for banks will be reduced by 0.25%. The move will free up about 500 billion yuan ($70 billion) of long-term liquidity to stimulate the economy. The last time the Central Bank cut the RRR in April (also by 0.25%).
China is using the RRR cuts along with other monetary policy instruments to maintain sufficient liquidity, China's cabinet said this week.
The world's second-largest economy experienced a significant slowdown in October, with business and consumer confidence remaining weak as disruptions due to the coronavirus intensified and export orders remained under pressure. Overall, the recent surge in COVID-19 cases has increased concerns about the outlook for the economy in the 4th quarter of 2022.