China made an unexpected cut in its bank reserve ratio. It is the first time the action has been taken in two years.
Bloomberg writes
Reserve ratios will decline by 50 basis points effective Dec. 5, the People’s Bank of China said in a statement on its website today. Before the announcement, the level was a record 21.5 percent for the biggest lenders, based on previous PBOC statements.
The move is seen as a way to help support what appears to be a flagging economy. China’s PMI has been weak for two months, and there is a fear that factory activity could begin to contract. China has posted a 9% plus GDP growth in most of the quarters of the last five years, only slowing at the depth of the 2008 recession.
Reuters writes that
The cut lowers the reserve ratio for China’s biggest banks to 21 percent from record highs, and frees up funds that could lubricate lending to cash-deprived small firms.
There will be concerns that the action could rekindle inflation which has been muted in the last quarter. Earlier in the year, food prices were up in the double digits in some cases. The price of energy was also affected by the import of crude to support industry and transportation. Many experts believe this demand helped push global oil prices above $90
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.