Beijing (CNS) – The People's Bank of China (PBoC) announced on Wednesday it will downgrade the financial institute's reserve requirement ratio (RRR) by 0.5 percent. Four hundred billion of the total 79.21 trillion yuan in outstanding deposits will flow into the market.
The RRR was the option used by the PBoC's monetary police to adjust the national economy, said Zhou Jingtong, senior analyst at the Bank of China's International Finance Research Institute, adding that the lowering of the reserve requirement was anticipated. He stressed China's adjustment to monetary policy is in the interests of maintaining its economic growth.
China's Consumer Price Index (CPI) peaked in July and then lost ground in a three month slide. According to the International Finance Research Institute, China's CPI dipped down to 5 percent and it will be below 4 percent by December, which seems to mean inflation has been restrained as expected.
Guo Tianyong, director of the Chinese bank industry research center at the Central University of Finance and Economics, surmises that downgrading the RRR is a temporary measure. China's monetary policy needs to maintain economic stability, he concluded.
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