China loosens monetary policy for first time in three years

Today the People's Bank of China (PBC) has slashed reserve requirements for all banks by 50 basis points from December 5.

The move is the first time the Chinese government has eased its monetary policy in three years. Its action is designed to ease constraints on bank lending, after the level of excess reserves dropped to worryingly low levels. Analysts suspect Beijing is growing nervous over slowing growth in the country. According to Capital Economics, this move is a deliberate and public attempt to boost China's economy. "The PBC could have achieved the same end of loosening constraints on credit growth quietly through its open market operations. The fact that it chose to act in this more public wa...