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China may cut banks' reserve requirements in the next two months, as part of a modest loosening of the monetary policy.
An association under the People's Bank of China says the central bank will mainly rely on open-market operations for fine-tuning of policy in the third quarter. It added that with an economic slowdown, maintaining growth will again become a priority in macro-economic control. It's also suggested there is a possibility the central bank will cut the deposit reserve ratio.
China has increased the proportion of deposits that banks must keep in reserve three times in 2010.