SMM NiCoLiMn Summit: Necessity of broad-based RRR cuts lowers amid sufficient liquidity

YIBIN, Apr 28 (SMM) – With sufficient and reasonable liquidity and falling interest rates, it has been less necessary for China’s central bank to broadly ease lenders’ reserve requirements, said Lian Ping, Chief Economist of Bank of Communications, at the SMM Nickel-Cobalt-Lithium-Manganese Summit on Sunday April 28 in Yibin, Sichuan province.

The chance of a targeted reserve requirement ratio (RRR) cut, however, lingers as small firms still need support with lenders, especially small and medium-sized one, facing wide liquidity gaps amid the continued high share of cash banks must hold as reserves, Lian added.

The People’s Bank of China (PBOC) has cut RRRs five times since the start of 2018, lowering the ratio to 13.5% for big banks and 11.5% for small-to medium-sized lenders. The ratio once remained below 8% for a long while.