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This announcement came at the exact same time as the Bank of England’s announcement that it would be boosting its asset purchase program.
Initially, headlines crossed that China also cut its bank reserve requirement ratio (RRR). That has since been corrected.
Why This Is Important
China’s growth rate has been decelerating lately, which had some economists concerned that its economy would land hard. In a hard landing, the unemployment rate picks up and the economy risks sinking all the way into recession.
China is the second largest economy in the world. And for most economies, China is also the main source of growth.
Economists had been speculating that China could move to ease monetary policy.
However, this comes very unexpectedly.