China to cut reserve requirement ratio for financial institutions

China's central bank on Friday said it has decided to cut the reserve requirement ratio (RRR) for financial institutions by 0.25 percentage points to support the development of the real economy and reduce comprehensive financing costs.

The cut will take effect on April 25, except for financial institutions that have already implemented a 5 percent RRR, the People's Bank of China said in a statement.

The central bank said it will cut the ratio by another 0.25 percentage points for city commercial banks operating only within provincial administrative areas and rural commercial banks that are currently subject to an RRR of over 5 percent, so as to enhance support for small and micro firms and the agricultural sector.

After the reduction, the weighted average RRR for Chinese financial institutions will stand at 8.1 percent, the central bank said.

It said it will continue to implement a prudent monetary policy, avoid "flood-like" stimulus, and better utilize monetary policy tools to adjust both the monetary aggregate and the monetary structure.