PBOC Cuts RRR by 50 bps, Releasing About CNY 1.1 Trillion in Liquidity

The People's Bank of China announced a 50 basis point cut to the reserve requirement ratio (RRR) for financial institutions effective next month, expected to release approximately CNY 1.1 trillion in long-term liquidity. This is the second RRR cut this year and an important component of the recent series of growth-stabilization policies. After the cut, the average statutory reserve ratio for large banks falls to 9.0%. Offshore yuan (CNH) briefly fell to 7.30 following the announcement before stabilizing with PBOC midpoint guidance. Analysts believe the cut will help ease liquidity pressure on small and mid-sized banks, though its effectiveness in stimulating credit demand remains to be seen.