“The official comments may reinforce expectations of PBOC easing, as the central bank mentioned the RRR tool and signalled a willingness to guide interest rates lower,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. He added, though, that a lot of easing hopes have “already been priced in.”
China’s central bank signaled that it’s prepared to keep policy loose by lowering the amount of money banks must keep in reserve, reinforcing expectations among investors of more easing to come.
The People’s Bank of China will use a variety of tools to provide “strong support” for a reasonable growth in credit, said Zou Lan, head of the central bank’s monetary policy department, in an interview with Xinhua News Agency late Monday. He highlighted “reserve requirements” as one option, suggesting policymakers have considered trims to that ratio as a way to boost lending capacity and bolster credit.
