BEIJING, Jul 7 (Reuters) – China will use gradual bank reserve reserve (RRR) cuts to support the real economy, especially small businesses, state media reported on Wednesday after citing the cabinet.
The central bank has been trying to cool credit growth to reduce debt risks, keeping financing costs low and asking lenders to continue to circulate funds to small businesses.
China will use “monetary policy tools, including reserve reserve cuts, at the appropriate time, to financially assist the real economy, particularly small businesses,” the cabinet was quoted as saying after a meeting.
China will reduce financing costs for small businesses to help them cope with rising commodity prices, he added.
The country will keep its monetary policy stable while reinforcing the effectiveness of its strategy, but will not resort to gigantic monetary stimuli, state media said.
China should guide lower market interest rates to support economic growth and ease financing pressure on local governments, a former central bank official said.
(Reports by Colin Qian, Judy Hua and Kevin Yao. Edited in Spanish by Marion Giraldo)
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