China stepped up its easing policy further today with a general cut in the reserve requirement ratio of 0.5 percentage points. This comes only four weeks after China announcing a reduction in the down payment for first time house buyers, see China eases further - aimed at ailing construction sector , 2 February.
The move is not a total surprise as more monetary easing was anticipated but China likely postponed this while the deprecation pressure was raging during January. However, with some calm restored China saw a window to ease policy.
It is probably not a coincidence that the move comes after the G20 meeting where policymakers discussed the scope for underpinning global growth further. Next in line to ease its policy is set to be the ECB at its meeting on 10 March.
This should help underpin global risk sentiment but since it is not a big surprise it will probably not have a major effect. More important from China will be the PMI data due for release tomorrow.
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