FX.co ★ PBoC to Cut RRR, Lower 7-day Reverse Repo

The Governor of the People's Bank of China (PBoC), Pan Gongsheng, announced today a planned reduction in the reserve requirement ratio (RRR) by 50 basis points. This adjustment aims to release approximately CNY 1 trillion into the financial system, although the precise timing of this measure remains unspecified. This decision marks the first RRR adjustment of 2025, aligned with Beijing's strategy to bolster economic growth amid escalating trade tensions with the United States. Additionally, the PBoC will decrease the rate on seven-day reverse repurchase agreements by 10 basis points to 1.40%, with this change taking effect on Thursday, May 8. This marks the first reduction of the central policy rate since September 2024, potentially leading to wider decreases in market rates and other liquidity tools.