To keep liquidity adequate at a reasonable level, promote steady decline of overall financing costs, implement the package of policy measures to stabilize the economy, and consolidate the foundation of economic recovery, the People’s Bank of China (PBC) is scheduled to cut the required reserve ratio (RRR) for financial institutions by 0.25 percentage points (excluding those that have already implemented an RRR of 5 percent) on December 5, 2022. The weighted average RRR for financial institutions will be 7.8 percent after the cut.

Following the guidelines of the 20th CPC National Congress, the PBC will enhance the implementation of the sound monetary policy, focus on supporting the real economy, refrain from adopting a deluge of strong stimulus policies, and strike a balance between internal and external equilibria. Giving better play to the role of monetary policy instruments in adjusting both the aggregate and the structure, it will keep liquidity adequate at a reasonable level, ensure the growth of money supply and the aggregate financing to the real economy (AFRE) are basically in line with the nominal GDP growth, and support the financing of key areas and weak links. With these efforts, the PBC aims to effectively upgrade and appropriately expand the economic output.