Bloomberg News

China’s Reserve-Ratio Cut Signals Policy Shift, Citigroup Says

November 30, 2011

Dec. 1 (Bloomberg) -- China’s reduction in reserve requirements for bank signals a “shift in focus” from anti- inflation to economic growth stability, Citigroup Inc. said.

“The government appeared increasingly concerned about the downside risks, and RRR cut can represent a start of policy easing,” Citigroup analysts led by Shuang Ding said in a report dated yesterday. The central bank may also take more measures to achieve targeted money growth, which is below the official target of 16 percent, they wrote.

A “couple” more cuts in reserve requirements are “possible” before the Chinese New Year in late January, with yesterday’s move representing government “readiness” to act to avoid a sharp downturn, they wrote.

To contact the editor responsible for this story: Richard Frost at rfrost4@bloomberg.net


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