China's central bank said it will cut the amount of cash that banks must hold as reserves, its first such move this year as regulators scrambled to respond to the stock-market selloff.
The People's Bank of China will cut the reserve-requirement ratio for all banks by 0.5 percentage point, effective Feb. 5, Gov. Pan Gongsheng said at a press conference in Beijing, a move that will release 1 trillion yuan ($139.93 billion) of liquidity into the market.
Wednesday's surprise reduction followed quarter-percentage-point cuts in September and March last year.
The central bank will also cut relending and rediscount rates by 0.25 percentage point for the rural sector and small firms from Thursday, Pan said.
The central bank and the National Administration of Financial Regulation will optimize China's commercial property loan policies, widening the scope of fund use to support the country's ailing property sector, Pan said. New policies will be announced later today or tomorrow, he said.
Pan also said the central bank is set to establish a department for China's credit market, a new agency tasked with guiding financial institutions to channel more funds into areas Beijing deems strategic.
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(END) Dow Jones Newswires
01-24-24 0422ET
