China’s central bank announced a cut to the amount of cash that banks must hold as reserves for the second time this year, which would result in releasing about 500 billion yuan ($69.8 billion) in long-term liquidity to support an economy damaged by surging Covid cases and a crumbling property sector.
The People’s Bank of China said in a statement on Friday that the reserve requirement ratio for most banks will be reduced by 25 basis points.
The move by China’s central bank came after significant government actions recently to buoy the economy.
Still, economists expected China’s growth outlook remains challenging as a recovery in the housing market will likely be slow, while the recent Covid outbreak will pressure its economic growth and recovery. Nomura Holdings Inc. cut China’s gross domestic growth forecast in 2023 to 4%.