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Heightened global risks from the war in Ukraine, widespread
COVID-19 lockdowns and a weak property market are causing
convulsions in the world's second-largest economy that are
quickly spilling over into global supply chains.
China's exports, the last major growth driver, are also showing
signs of fatigue, and some economists say the risks of a
recession are rising.
The People's Bank of China (PBOC) said on its website it would
cut the reserve requirement ratio (RRR) for all banks by 25
basis points (bps), effective from April 25.
The central bank said it will cut RRR by an additional 25 bps
for some smaller rural and urban commercial banks.
An imminent RRR cut was widely expected after the country's
cabinet said on Wednesday that monetary policy tools should be
used in a timely way to bolster growth.
The RRR cut, which followed a broad-based reduction in December,
marks the latest step by Chinese policymakers to cushion a sharp
slowdown. The central bank has also started cutting interest
rates, while local governments have expedited infrastructure
spending and the finance ministry has pledged more tax cuts.
But some market watchers say Beijing's room to cut policy rates
is limited.
With other major central banks like the U.S. Federal Reserve set
to aggressively raise interest rates or already doing so, more
forceful easing in China could spur potentially destabilising
capital outflows as investors shift money to higher yielding
assets.
Earlier on Friday, the PBOC left borrowing costs on medium-term
policy loans unchanged for a third straight month, as expected.
(Reporting by Stella Qiu, Kevin Yao and Beijing newsroom;
Editing by Kim Coghill)
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