China announces 0.5% cut in banks’ minimum reserves

Biggest reduction since December 2021 will allow 1tn more yuan to be released in form of new loans

China's central bank has announced a surprise cut to the amount of cash that banks must hold in reserve, hoping to boost the lending available to households and businesses as policymakers try to steer the economy through a fragile recovery.

Pan Gongsheng, the governor of the People's Bank of China (PBOC), said on Wednesday that the reserve requirement ratio would be cut by 0.5% from 5 February, the deepest cut to the rate since December 2021. The move will allow about 1tn yuan (110.8bn) to be released in the form of new loans.