The Economic Times (07/10/2018) - China's central bank said on Sunday that it was cutting the reserve requirement ratios (RRRs) by one per cent from October 15 which will inject a net USD 109.2 billion in cash into the banking system, amid a deepening trade war with the US that has increased pressure on growth in the world's second-largest economy.

The reserve cut, the fourth by the People's Bank of China (PBOC) this year, came after Beijing pledged to speed up plans to invest billions of dollars in infrastructure projects as the economy shows signs of cooling further.

The PBOC said on Sunday it will cut the RRR for RMB deposits by one percentage point starting from October 15. The cut will enable banks in China to release 1.2 trillion-yuan cash for additional lending.

Some of the liquidity unleashed will be used to pay back the 450 billion yuan (USD 65 billion) of the medium-term lending facility that will mature on October 15, state-run Xinhua news agency reported.

In addition, the liquidity of another 750 billion yuan (USD 110 billion) will be injected into the market for lending, according to the PBOC statement.

The announcement of the relaxing the RRR requirement for the banks, which are also saddled with the huge local government debt of USD 2.58 trillion comes amid deepening trade war with US and raising of the interest rates by US Federal Reserve, intensifying the pressure on capital outflows.

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