China's central bank announced a steep cut in the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth amid concerns over the economic drag from an escalating trade dispute with the United States.
The move will inject a net 750 billion Yuan (US$ 109.2 billion) in cash into the banking system by releasing a total of 1.2 trillion Yuan in liquidity, with 450 billion Yuan of that to offset maturing medium-term lending facility loans.
The reserve requirement cut, the fourth by the People's Bank of China (PBOC) this year, comes after Beijing pledged to expedite plans to invest billions of dollars in infrastructure projects as the economy shows signs of cooling further, with investment growth slowing to a record low.
Reserve requirement ratios (RRRs) - currently 15.5% for large commercial lenders and 13.5% for smaller banks - would be cut by 100 basis points effective Oct 15, the PBOC said, matching a similar-sized move in April.
Beijing has stepped up liquidity support across the financial system this year as policymakers have focused on calming fears of capital outflows and sought to soothe battered markets even as anxiety grows that a heated trade war with the United States could deal a damaging blow to the broader economy.
China's yuan currency has faced strong selling pressure this year, losing over 8% between March and August at the height of market worries, though it has since cut losses as authorities stepped up support.