The People’s Bank of China (PBC), the country’s central bank, announced on Thursday that there remains room to reduce the reserve requirement ratio (RRR) for banks and pledged to continue its supportive monetary policies aimed at bolstering the economy. This move underscores the PBC’s commitment to fostering a favorable monetary environment to boost market confidence and aid China’s economic recovery.

Currently, the average RRR for financial institutions stands at around 7 percent, with potential for further reductions, according to Zou Lan, a senior central bank official. Speaking at a press conference, Zou emphasized that the PBC would adjust the intensity and pace of monetary policy in line with the economy’s recovery and macroeconomic conditions.

This year’s RRR reductions, such as the 50-basis point cut in February for all commercial banks, have positively impacted the economy. Regarding interest rates, Zou indicated that the central bank will continue to lower financing costs to support enterprises and consumers, although further rate cuts may be limited by banks’ shrinking net interest margins.

The PBC reaffirmed its intention to maintain a supportive monetary policy, implement previously introduced measures, and provide stronger support for high-quality economic development. It plans to utilize various tools to ensure liquidity remains abundant and aligns with growth and price targets.

Zhou Maohua, an economist at China Everbright Bank, praised the PBC’s strategy, stating that further RRR cuts and structural tools could be implemented as needed, particularly given the current low-price environment, which allows for more favorable policy measures.