China is cutting the
amount of money banks need to hold in reserve, freeing those funds to stimulate
the Chinese economy.
The People's Bank of China said
Wednesday it will lower its reserve requirement ratio for financial institutions by
half a percentage point. It was the first such cut in the ratio since 2008, and
a change in course after the ratio was raised five times this year.
The cut is effective Dec. 5.
The move is intended to increase liquidity, ramping up the flow of
money into the economy to make up for concerns about slackening demand for
Chinese products both domestically and abroad, particularly from Europe.
China has experienced rapid growth recently,
leading many to worry that the economy could be overheating and runaway
inflation could take hold. In response, the government had taken several steps
to control soaring inflation without
stifling growth. Read
more at CNNMoney...
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