China cuts RRR, lowers interest rates

The People's Bank of China (PBOC), the central bank, announced on Tuesday a cut in the reserve requirement ratio (RRR) and lower key interest rates.

The move was described in a PBOC statement as "promoting restructuring" to "stabilize the real economy".

On Sept. 6, the RRR for financial institutions will be cut by 50 basis points. The RRR for financial leasing companies and auto financing companies will be lowered by 300 basis points.

Benchmark interest rates will also be cut. From Wednesday, interest rates for one-year lending and deposits will be cut by 25 basis points to 4.6 percent and 1.75 percent respectively.

It is the fourth RRR reduction in nearly seven months and the fifth round of interest cuts in nearly nine months.

As economic growth continues slowing and global financial markets fluctuate, China faces a tough task to stabilize growth and needs to use the monetary policy tools more flexibly, the PBOC explained.