China's central bank has vowed to increase supply of liquidity to the financial system, through measures including reduction of banks' reserve requirement, Xinhua reported late Wednesday citing an interview of an unnamed central bank official.
The People's Bank of China is considering options including reverse repurchase operations and reduction in the reserve requirement rate of commercial banks in order to release additional cash to the system, the official told Xinhua.
The central bank will undertake "targeted liquidity management operations" while considering factors such as foreign capital inflows and loan demand.
In February, the PBoC reduced the required-reserves ratio for the second time in three months to boost lending.
Analysts are betting on another reserve ratio cut in the near-term after China's economic growth eased to the weakest in nearly three years in the first quarter. Last week, the bank decided to cut reserve ratios for some rural financial institutions by one percentage point after the weak GDP data.
The World Bank has urged China to tweak its reserve requirements further to ease the availability of credit. Chinese banks extended CNY 1.01 trillion new loans in March, well above economic expectations, according to PBoC data.
by RTT Staff Writer
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