China cuts its reserve ratio again

 　　BEIJING, May 13 (Xinhuanet) - China's central bank announced on Saturday it would lower the reserve requirement for commercial lenders by 50 basis points, the second time it has taken such action this year to inject more market liquidity¹ and shore up the economy.

　　Effective May 18, the cut would release about 400 billion yuan into the market, said Lian Ping, chief economist² at the Bank of Communications Co Ltd. After the cut, the reserve requirement ratio (RRR) for major banks will stand at 20 percent, while for small and medium-sized lenders, the ratio will be reduced to 16.5 percent.

　　"The move reflects that the Chinese economy fell into unstable³ conditions and timely adjustments in monetary⁴ policies are needed," said Wu Xiaoqiu, an economist at Renmin University of China.

　　The world's second-largest economy continued to slow in April, as industrial production registered the lowest growth in three years of 9.3 percent. Retail⁵ sales growth slowed to 14.1 percent from March's 15.2 percent, and export growth undershot expectations by falling to 4.9 percent from 8.9 percent one month earlier.

　　The new cut in RRR was mainly targeted at countering capital outflows, which would pose negative effects on current monetary polices, said independent economist Andy Xie.

　　China's foreign-exchange reserves dropped by $4.69 billion from February to March - the first monthly decline since last December, partly dragged down by short-term capital outflows, said analysts⁶.

　　Conditions are right for another RRR cut in May, said Liu Ligang, head of China economics at Australia and New Zealand Banking⁷ Group Ltd.

　　He said renewed political risks in the euro zone and a sharp fall in market liquidity led by a drought in maturing central bank bills called for further easing of monetary policy.

　　China's new yuan loans in April fell to 681.8 billion yuan, down by 61.2 billion yuan compared with a year earlier, and 328.2 billion yuan lower than March's 1.01 trillion yuan, according to data released by People's Bank of China, the central bank, on Friday.

　　"M2 (a broad measure of money supply that covers cash in circulation and deposits) growth in the first quarter fell short of the targeted 14 percent. This will need to be addressed by fast reserve money growth."

　　Liu said a reserve-ratio cut would be more effective at encouraging bank lending and accelerating M2 growth than a reduction in the intensity⁸ of open market operations.

　　He added the central bank might need to lower the RRR by 1.5 to 2.0 percentage points this year to meet the M2 growth target including the cut this time, and the next RRR cut could come in June or July.

　　Lu Zhengwei, chief economist at the Industrial Bank Co Ltd, said given the economic growth rate has been close to the lower limit of tolerance⁹, and inflation rate eased to somewhere below normal level, in the second and third quarter the government would continue to loosen its monetary stance, "but a large dose of relaxation¹⁰ is impossible".

　　Growth of the consumer price index, a main gauge¹¹ of inflation, moderated to 3.4 percent year-on-year in April in line with expectations, compared with March's 3.6 percent.

　　Lu said in the future the central bank would probably take more actions through open market operation and make necessary innovation to its monetary instruments.

1 liquidity   

n.流动性，偿债能力，流动资产

参考例句：

• The bank has progressively increased its liquidity.银行逐渐地增加其流动资产。
• The demand for and the supply of credit is closely linked to changes in liquidity.信用的供求和流动资金的变化有密切关系。

2 economist   

n.经济学家，经济专家，节俭的人

参考例句：

• He cast a professional economist's eyes on the problem.他以经济学行家的眼光审视这个问题。
• He's an economist who thinks he knows all the answers.他是个经济学家，自以为什么都懂。

3 unstable   

adj.不稳定的，易变的

参考例句：

• This bookcase is too unstable to hold so many books.这书橱很不结实，装不了这么多书。
• The patient's condition was unstable.那患者的病情不稳定。

4 monetary   

adj.货币的，钱的；通货的；金融的；财政的

参考例句：

• The monetary system of some countries used to be based on gold.过去有些国家的货币制度是金本位制的。
• Education in the wilderness is not a matter of monetary means.荒凉地区的教育不是钱财问题。

5 retail   

v./n.零售；adv.以零售价格

参考例句：

• In this shop they retail tobacco and sweets.这家铺子零售香烟和糖果。
• These shoes retail at 10 yuan a pair.这些鞋子零卖10元一双。

6 analysts   

分析家，化验员( analyst的名词复数 )

参考例句：

• City analysts forecast huge profits this year. 伦敦金融分析家预测今年的利润非常丰厚。
• I was impressed by the high calibre of the researchers and analysts. 研究人员和分析人员的高素质给我留下了深刻印象。

7 banking   

n.银行业，银行学，金融业

参考例句：

• John is launching his son on a career in banking.约翰打算让儿子在银行界谋一个新职位。
• He possesses an extensive knowledge of banking.他具有广博的银行业务知识。

8 intensity   

n.强烈，剧烈；强度；烈度

参考例句：

• I didn't realize the intensity of people's feelings on this issue.我没有意识到这一问题能引起群情激奋。
• The strike is growing in intensity.罢工日益加剧。

9 tolerance   

n.宽容；容忍，忍受；耐药力；公差

参考例句：

• Tolerance is one of his strengths.宽容是他的一个优点。
• Human beings have limited tolerance of noise.人类对噪音的忍耐力有限。

10 relaxation   

n.松弛，放松；休息；消遣；娱乐

参考例句：

• The minister has consistently opposed any relaxation in the law.部长一向反对法律上的任何放宽。
• She listens to classical music for relaxation.她听古典音乐放松。

11 gauge   

v.精确计量；估计；n.标准度量；计量器

参考例句：

• Can you gauge what her reaction is likely to be?你能揣测她的反应可能是什么吗？
• It's difficult to gauge one's character.要判断一个人的品格是很困难的。