Home Economy PBOC central bank signals RRR cut in surprise policy move

PBOC central bank signals RRR cut in surprise policy move

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Chengdu city street vendors, like this one pictured on June 18, 2020, were mentioned by Chinese Premier Li Keqiang during COVID-19 as an example of economic recovery.

Yuyang Liu | Getty Images News | Getty Images

BEIJING — China’s top executive body surprised investors late Wednesday by saying the central bank would stimulate the economy by cutting the amount of funds banks need to hold in reserve.

“We think this policy signal suggests the economy likely slowed in June,” Zhiwei Zhang, chief economist, Pinpoint Asset Management, said in a note. He said policymakers likely already know what retail sales and other macroeconomic data for June look like.

Economic data for last month and second-quarter gross domestic product are due out on Thursday next week.

Investors may already have some clues. On Monday, the China Association of Automobile Manufacturers said passenger car sales in China likely fell 14.9% in June from a year ago. Autos are a major component…

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