China's central bank said Wednesday it will lower the reserve requirement ratio for banks by 0.50 percentage points from Thursday to super its economy.
The decision, posted by the People's Bank of China on its Website, leaves the reserve requirement ratio for banks at 19.5 percent. It is the first time since May 2012 that the central bank cut the ratio, or the amount of deposits that banks are required to hold as reserves.
The rate cut comes after the central bank lowered benchmark interest rate for the first time in more than two years in November 2014.
In addition, the central bank will cut the reserve ratio by an extra 50 basis points for urban and rural commercial banks that lend to small and mid-sized businesses.
The reserve ratio for China Agricultural Development Bank will be reduced by an additional 4 percent. The world's second-biggest economy's growth rate slowed to 7.4 percent in 2014, the slowest pace in 24 years.