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The People's Bank of China announced on Sunday a 100 basis points cut to the reserve requirement ratio (RRR) for most banks, which will result in an injection of 750 billion yuan ($109.2 billion) in cash into the banking system. But the central bank maintained that its monetary policy is still prudent and neutral — not accommodative.
A neutral monetary policy means the central bank is neither trying to slow nor stimulate the economy. When policy is said to be accommodative, it means the central bank is making it cheaper for businesses and households to borrow in hopes that they will increase spending and lift the economy.
PBOC - Stance - Policy - RRR - Cut
Despite the PBOC's official stance that its monetary policy is not yet accommodative, the fourth RRR cut of the year came as trade tensions between China and the U.S. escalate and will likely drag longer than many expect, analysts noted.
(Excerpt) Read more at: CNBC
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