Goldman Sachs: PBOC RRR cut was to boost liquidity

Analysts at Goldman Sachs explain the reason behind last week’s reduction in the reserve ratio by the Chinese central bank (PBOC), citing the move was implemented to boost liquidity before the Lunar New Year holidays.

Key Quotes:                                  

“The cost information given by the PBOC implies this was not a RRR cut but a new form of liquidity supply.”

“This move should not be viewed as a signal of looser monetary policy, and indeed the PBOC appears to have released the official statement in response to the media reports.”