CHINA will cut the reserve requirement ratio (RRR) for banks at an appropriate time to strengthen support for the real economy, especially for small- and medium-sized enterprises (SMEs), Premier Li Keqiang said Friday.

A lower RRR means banks do not need to keep as much cash in their reserves, which gives them more money that can be loaned to companies.

The country will continue to implement prudent monetary policy, maintain liquidity at a reasonably ample level and make policies according to the needs of market entities, so as to ensure the stable and healthy development of the economy, Li said during a video meeting with Kristalina Georgieva, managing director of the International Monetary Fund (IMF).

China will continue to coordinate COVID-19 epidemic control efforts with economic and social development, implement stable macroeconomic policy and make it more targeted and effective, he said.

Since a broad-based cut to reserve ratios in July, the central bank has defied market expectations for further policy easing.

Hu Yifan, regional chief investment officer and chief China economist at UBS Global Wealth Management, said last week she expected the central bank to cut reserves banks are required to hold by Lunar New Year in early February.

But some analysts believe an easing step could come sooner.

“A near-term RRR cut is possible,” said Tang Jianwei, senior economist at Bank of Communications in Shanghai.

The RRR for large banks, after taking into consideration the preferential policy of targeted cuts for inclusive financing, is at 10.5 percent.(SD-Agencies)