China “Unexpectedly” Cuts Required Reserve Ratio In Desperate Bid To Contain Market Collapse

• China “Unexpectedly” Cuts Required Reserve Ratio In Desperate Bid To Contain Market Collapse
  by Tyler Durden, https://www.zerohedge.com/
  In a move many said was very long overdue, this morning China which has paradoxically waited too long until deflation reigns across the country, said it will cut the required reserve ratio (RRR) by 50bps within two weeks and hinted at more support measures to come, which while coming largely in time with the easing ahead of the lunar new year was an unusually early disclosure that shows mounting urgency across President Xi Jinping’s government to shore up the economy and halt a $6 trillion stock-market rout. The cut was announced unexpectedly by People’s Bank of China Governor Pan Gongsheng during a press conference on Wednesday in Beijing and sends a new signal that officials are eager to curb the stock-market selloff, while also stepping up support for the broader economy.
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  The RRR, which determines the amount of cash banks have to keep in reserve, will be lowered by 0.5% on Feb. 5 to provide 1 trillion yuan ($139 billion) in long-term liquidity to the market, the People’s Bank of China’s Governor Pan Gongsheng told reporters at a briefing.
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  The cut comes on the heels of signs of gathering government support for China’s swooning stock market, with investors detecting a rash of share buying by pension funds, insurers and other state-linked firms, and follows a Bloomberg report that Beijing is also “mulling” a 2 trillion market rescue package.
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  As Bloomberg notes, it was a “rare and transparent reveal of a policy change by the head of the PBOC.” Typically the central bank announces it on its website first, with the State Council — China’s cabinet — sometimes hinting at one beforehand. But troubling economic data and the massive rout in stocks have prompted authorities to step up rhetoric this week. Pan’s remarks add to a flurry of promises from other agencies following a call by Premier Li Qiang to stabilize the market.
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