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China's Central Bank Trims Reserve Ratios For Some Financial Institutions

The People's Bank of China on Friday decided to cut reserve ratios for some rural financial institutions by one percentage point, reports said citing SINA.

The reserve ratio requirement cut came after the economy logged it weakest growth in nearly three years. The gross domestic product expanded 8.1 percent year-on-year in the first three months of 2012.

In February, the central bank had reduced the reserve requirement ratio by 50 basis points to 20.5 percent for large commercial banks.

Yesterday, the World Bank urged China to tweak its reserve requirements further to ease the availability of credit. But the policy rate action should best be reserved for potential downside scenarios since real interest rates are already accommodative, it said.

by RTT Staff Writer

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