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Bank of China Lowers RRR to Promote Market Liquidity

The People’s Bank of China (PBOC) injected liquidity into the banking system today (April 25) by lowering the reserve requirement ratio (RRR) of commercial banks and entering into an agreement to purchase 7-day bonds.

The PBOC has decided to reduce the RRR for financial institutions by 0.25%, allowing about 5.30 billion yuan.

Reducing the RRR aims to promote real economic development and lower comprehensive financing costs.

In addition, the PBOC injected 10 billion yuan of cash into the market through an agreement to purchase bonds with a 7-day resale period at an interest rate of 2.1%.

In a resale agreement bond purchase contract, the PBOC purchases securities from a commercial bank through a tender with an agreement to resell them in the future.

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