People's Bank of China to cut RRR by 50 basis points from January 6

Announcement from the PBOC on Wednesday

• to cut the reserve requirement ratio (RRR) for financial institutions by 50 basis points from Jan 6

In effect this is a cut to the amount of reserves a lender must hold

• It will release funds for lending

A PBOC official said the RRR cut will impact to offset cash demand ahead of the Spring Festival, banking system liquidity will remain basically stable

• Said it does not amount to "flood-like" stimulus" - the stance of prudent monetary policy has not changed