China’s Cabinet Signals RRR Cuts to Support Real Economy

China will use monetary policy tools including cuts in its bank reserve requirement ratio to support the real economy, especially small and medium-sized enterprises, the State Council said on Wednesday.

China will avoid “flood-like” stimulus and keep monetary policy stable and increasingly effective, the cabinet said, to lower financing costs for small and medium-sized businesses faced with rising commodity prices.

China’s central bank last cut its RRR in April 2020, unleashing about $56 billion to bolster the country’s pandemic-hit economy by slashing small banks’ reserve requirements.

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