To effectively upgrade and appropriately expand the economic output, introduce an optimal combination of macro policies, better serve the real economy, and keep the liquidity in the banking system adequate at a reasonable level, the People’s Bank of China (PBOC) 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 March 27, 2023. The weighted average RRR for financial institutions will be about 7.6 percent after the cut.

Following the guidelines of the 20th National Congress of the Communist Party of China (CPC), the Central Economic Work Conference, and Two Sessions (National People’s Congress and the Chinese People’s Political Consultative Conference), the PBOC will, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, pursue a sound monetary policy in a targeted and effective manner. It will give better play to the role of monetary policy instruments in adjusting both the aggregate and the structure. The PBOC will also keep the money and credit supply moderate and stable, the liquidity adequate at a reasonable level and the growth of money supply and the aggregate financing to the real economy (AFRE) basically in line with the nominal GDP growth, so as to better support major areas and weak links of the economy. It will refrain from launching a deluge of strong stimulus policies and properly balance internal and external equilibria, in a bid to promote high-quality economic development.