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Reply #63: China's central bank cuts reserve ratios to boost sagging economy [View All]

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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 09:26 AM
Response to Reply #28
63. China's central bank cuts reserve ratios to boost sagging economy
China's central bank cuts reserve requirements to inject liquidity into the country's slowing economy
In an unexpected policy shift, China's central bank said Wednesday that it would cut the amount of money banks must hold in reserve, a move aimed at boosting liquidity in the country's slowing economy.


"Today's surprise reserve ratio cut marks the start of an across-board easing policy for China," Qu Hongbin, an economist for HSBC, wrote in a note Wednesday. "This, plus tax cuts and additional fiscal spending should help keep China on track for a soft-landing."


The move allows banks to inject more credit into the economy, which has been feeling the effects of declining export orders from the West and plunging property transactions because of government cooling measures.

"More important though is the signal this gives to the markets and to investors," Mark Williams, chief Asia economist for Capital Economics, wrote in a note to clients Wednesday. "The fact that chose to act in this more public way is a signal not only that policymakers are loosening but that they want to be seen to be doing so."

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