LAUNCESTON, Australia, Oct 8 (Reuters) – China’s commodity imports may get a shot in the arm from Beijing’s decision to ease credit conditions in the world’s second-largest economy, but it may not be as big a boost as followed prior monetary loosening.
The People’s Bank of China on Sunday announced a steep 100 basis point cut in the level of cash that banks must hold as reserves, matching a similar move in April.
The easing of the reserve requirement ratios (RRRs) will inject a net 750 billion yuan ($109 billion) into the banking system, making it easier for banks to extend credit.
The loosening of monetary conditions appears to be aimed at shoring up confidence in China’s economy, which has been battered by the escalating trade war with the administration of U.S. President Donald Trump.
There are signs that China’s economy is feeling some pain from the tariff barriers being erected, with equity prices struggling and certain indicators, such as fixed asset investment, trending weaker.