“The reserve cut will help supplement liquidity at the end of the quarter, increase the space for boosting credit and promote the rapid recovery of the economy,” said Tang Jianwei, senior economist at Bank of Communications. China’s central bank has been encouraging banks to lend more to small firms and other vulnerable sectors under its inclusive financing push, and has urged lenders to extend cheap loans and tolerate late payments from companies hit by the health crisis.
“The reduction will also give confidence to the financial market to some extent, in response to the pessimism of the recent decline in global capital markets,” Tang added.
