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RRR cut intended to provide lockdown support

The reduction in the required reserve ratio that the PBOC just announced will help banks follow through on a directive to defer loan repayments from firms struggling with widening lockdown restrictions. Market interest rates may also edge down as a result, even if that’s not the main goal. But few firms or households are willing to commit to new borrowing in this uncertain environment. A small fall in interest rates wouldn’t make a difference.  

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