CHINA’S central bank said Friday it was cutting the amount of cash that banks have to hold as reserves for the fifth time in a year, freeing up US$117 billion for new lending as it tries to reduce the risk of a sharp economic slowdown.

The cut comes amid mounting worries about the health of the world’s second-largest economy, which is facing both slowing demand at home and punishing U.S. tariffs on its exports.

The announcement came just hours after Premier Li Keqiang said China would take further action to bolster the economy, including reserve requirement ratio (RRR) cuts and more cuts in taxes and fees, highlighting the urgency to cope with increasing headwinds.

“This speedy RRR cut with great intensity fully demonstrates the determination of policymakers to stabilize growth,” said Yang Hao, an analyst at Nanjing Securities. “At present, the economy is facing very big downward pressure amid internal and external troubles.”

The cut in RRR is the first in 2019 by the People’s Bank of China. It cut the ratio for all banks, freeing up a net 800 billion yuan (US$116.51 billion) after lenders use some of the 1.5 trillion yuan in liquidity released to pay back maturing medium-term loans.

The size of the cut was at the upper end of market expectations, and the net funds released would be the largest amount in the five cuts since last January.

“Policy easing will be stepped up further over coming months,” Capital Economics said in a research note.

“With credit growth still slowing and, typically, a six-month lag before any turnaround in credit affects the economy, worries about the outlook for China will persist for several months yet.”

RRRs, currently 14.5 percent for large institutions and 12.5 percent for smaller banks, will be lowered by a total of 100 basis points in two stages, the People’s Bank of China said.

The cuts will be effective Jan. 15 and Jan. 25, ahead of the long Lunar New Year celebrations when cash conditions often get tight.

Further cuts in the RRR had been widely expected this year, especially after a spate of weak data in recent months showed the economy was continuing to lose steam amid increased signs of a pinch from the trade war with the United States.

China reported last Monday that factory activity shrank in December for the first time in over two years. (SD-Agencies)