China will lower banks’ reserve requirement ratio (RRR) by one percentage point for a second time this year in a bid to increase funding for private sector investment to spur growth as the world’s second largest economy continued to slow down.

The cut, effective from tomorrow, is the second such move this year. On February 4, the country’s central bank, the People’s Bank of China lowered the RRR, the amount of cash that banks must hold as reserves, by half a percentage point.

Meanwhile, to step up financial support to targeted areas, the central bank decided to cut the RRR by an extra one—percentage point for certain commercial banks lending to small enterprises, the farming sector and major water projects, state—run Xinhua news agency reported.

The Agricultural Development Bank of China, the sole policy lender for agriculture, gets a RRR reduction of 2 percentage points.

Today’s RRR cut was within market expectation following lacklustre economic performance in the first quarter.

China’s gross domestic product (GDP) growth slowed to 7 percent in the first quarter from 7.3 percent in the final three months of last year, marking the worst result in six years and indicating continuing downward pressure on the economy.

Last year the economy registered 7.4 per cent, lowest in 24 years.

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