China’s cabinet unexpectedly signals RRR cut to step up financial support to real economy, lower borrowing costs

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China should use monetary policy tools such as cuts in banks' reverser requirement ratio (RRR) in a timely way to step up financial support for the real economy, in particular for smaller companies, and lower borrowing costs, said the State Council, China's cabinet, at a meeting chaired by Premier Li Keqiang on Wednesday.

China will lower financing costs for small companies to help them cope with rising commodity prices, the cabinet said. It added that the country will keep monetary policy stable and increasing policy effectiveness, but will not resort to flood-like stimulus.