China will lower its rates again. The central bank of the Asian power announced this Friday its intention to lower the mandatory bank reserve rate, for the second time this year. A measure that will make it possible to inject some 500,000 million yuan (67,000 million euros) into a weakened economy, particularly due to the repeated confinements linked to Covid.
The People’s Bank of China (PBOC) will cut the bank reserve ratio by a quarter of a percentage point from December 5 to bring it to a weighted average rate of around 7.8 percent, the institution said.
This drop will allow “stabilizing the economy and consolidating the bases for a revival of growth,” the institution explained.
An anti-Covid strategy that weighs heavily on the economy
Despite several available vaccines and contrary to the rest of the world, China continues to apply strict restrictions to prevent infections and deaths.
This policy consists of imposing lockdowns as soon as cases appear, quarantining people who test positive in centers and requiring almost daily PCR tests to access public places.
But this strategy weighs heavily on the economy, especially business life and employment. Chinese growth reached 3.9% year-on-year in the third quarter but, according to analysts, the country will not be able to reach its annual growth target of around 5.5%.
Source: BFM TV
