China cuts reserve requirement ratio for financial institutions

China's central bank said Thursday it will cut the financial-institution reserve requirement ratio (RRR) by 0.25 percentage points from Sept. 15 to consolidate the foundation for economic recovery and keep liquidity reasonably ample.

The People's Bank of China said in a statement the cut will not apply to financial institutions that have already implemented a 5-percent RRR.

After the reduction, the weighted average RRR for financial institutions will reach around 7.4 percent, according to the statement.

The central bank said it would make prudent monetary policy precise and effective, keep liquidity reasonably ample, maintain moderate credit growth, and ensure money-supply momentum and social financing in line with nominal economic growth.

The central bank will also make monetary policy better support key areas and weak links, keep the exchange rate stable, and support the sustained recovery of the real economy.