China's reserve requirement ratio reduction by 100 basis points announced Sunday was the biggest such cut since the financial crisis.
The People's Bank of China lowered the amount set aside by banks as reserves to 18.5 percent effective Monday. This was the second reduction this year, an action taken after the economy logged its weakest growth in six years.
The central bank last lowered the ratio by 0.5 percentage points in February, which was the first reduction since May 2012. The latest move was intended to make available more funds for banks for lending and to divert funds to productive sectors.
The RRR for the Agricultural Development Bank was reduced by 2 percentage points.
Mark Williams, chief Asia economist at Capital Economics, said the action signals a stepping-up of policy support. It also suggests that any concerns policymakers have about the rapid gains in equity prices have been put on the back burner for now.
The second-largest economy grew only 7 percent in the first quarter. Although it met the government target of around 7 percent, this was the weakest expansion in six years and slower than the 7.3 percent growth in the fourth quarter of 2014.
The World Bank forecast China to expand at a moderate pace of 7.1 percent in 2015 and 7 percent next year. The moderation reflects continued efforts to address financial vulnerabilities and gradual shift to a more sustainable path of growth.
A report released by the National Bureau of Statistics revealed that house prices declined on a yearly basis in all 70 cities surveyed by the government.
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