> More on PBOC cash injections, use of other tools, could substitute for RRR cut

More on PBOC cash injections, use of other tools, could substitute for RRR cut

Thursday, 21/01/2016 | 04:16 GMT-0

Reuters with more on the huge liquidity injection from the People’s Bank of China today

People's Bank of China chief economist Ma Jun was quoted in China Business News as saying the liquidity injections could "imply a substitute for a cut in banks' reserve requirement ratios (RRR)"
PBOC is also injecting cash via three policy tools of the standing lending facility (SLF), medium-term lending facility (MLF) and pledged supplementary lending (PSL)
Analysts said the amount of cash to be injected is equivalent to a 50-basis points in RRR
The loans via SLF and MLF are shorter maturity, while cutting RRR would release long-term money

"If we use the tool of cutting banks' reserve requirement ratios (RRR) too frequently, it would pose big downward pressures on short-term interest rates, which is not conducive for stabilising capital flows and exchange rates"

via Reuters