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China cuts bank reserve rates by 0.5% to ensure liquidity

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The People's Bank of China has announced a 50 basis point cut in bank reserves with the objective of increasing liquidity. The measure has released around 800,000 million yuan ($ 114,910 million), state agency Xinhua reports.

The measure announced by the Chinese central bank will take effect on January 6 and its objective is to "boost the economy and reduce the cost of social financing"It is the third time in the last twelve months that the central bank cuts that percentage.

Analysts have explained that this movement reflects the concern of the Chinese Government for the liquidity needs of the market, since "it should further increase the availability of credit and support the ongoing recovery, indicating that monetary support will continue as we move towards 2020," said Danske Bank experts.

Other firms, however, question the effectiveness of the measure. Nomura's opinion is that the economy of the Asian giant "has not bottomed out," so they recommend cautiously fitting this gesture and its real reach into the market.

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