The People's Bank of China, the country's central bank, announced on Tuesday that it will soon reduce the bank reserve requirement ratio by 0.5 percentage points, injecting around 1 trillion yuan ($141.81 billion) in long-term liquidity into the financial markets.

Pan Gongsheng, governor of the PBOC, said at a news conference that the country will lower its key short-term policy interest rate, reducing the interest rate on 7-day reverse repos by 0.2 percentage points from the current 1.7 percent to 1.5 percent.

This move is aimed at guiding downward adjustments in the loan prime rate (LPR) and deposit rates, helping to maintain a stable net interest margin for commercial banks, Pan added.

The central bank reaffirmed its commitment to a monetary policy that prioritizes supporting the real economy, and would work to enhance the precision and effectiveness of its policy tools, Pan added.