BEIJING - China's central bank announced Wednesday that it will cut the reserve requirement ratio (RRR) by 0.5 percentage points for financial institutions from May 15.

Financial institutions that have already implemented a 5-percent RRR will be exempt from the upcoming reduction, and the RRR for auto financing and financial leasing companies will be cut by 5 percentage points, the People's Bank of China (PBOC) said in a statement.

The announcement came following PBOC governor Pan Gongsheng told a press conference that the central bank will roll out a package of monetary policies to enhance macro regulation, including lowering the policy rate and RRR.

Pan told the media that the move is expected to provide about 1 trillion yuan (about $138.9 billion) in long-term liquidity to the market.

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The RRR cut will improve the structure of liquidity provided by the central bank to the banking system, reduce banks' liability costs, and enhance the stability of their liabilities, said Pan.

After the reduction, the RRR for auto financing and financial leasing firms, which directly provide financial support for auto consumption and equipment upgrade investments, will come down to 0 percent, thus effectively enhancing their credit supply to these sectors, he added.

The PBOC also announced on Wednesday to cut the rate for the seven-day reverse repos by 0.1 percentage points starting Thursday to better implement the moderately loose monetary policy and enhance support for the real economy.

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Pan said the policy rate reduction is expected to lead the loan prime rate (LPR), a market-based benchmark lending rate, down by 0.1 percentage points.

Starting Thursday, the interest rates for the standing lending facility (SLF) will also be reduced by 0.1 percentage points, according to the PBOC.

More support via relending

China's central bank vowed on Wednesday more financial support through relending for sectors including tech innovation, service consumption and elderly care.

The PBOC will add the quota of relending for technological innovation and upgrading by 300 billion yuan (about $41.7 billion) to a total of 800 billion yuan, Pan told the press conference.

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The central bank will establish a 500-billion-yuan relending facility to support service consumption and elderly care, guiding commercial banks to enhance credit support for these sectors, Pan said.

He noted that the central bank will also add 300 billion yuan in relending quota to support agriculture and small businesses.