Deposit Reserve Ratio (RRR)
A practical explanation of Deposit Reserve Ratio (RRR), including what it means, how it is used, and why it matters in real savings decisions.
Definition
The reserve requirement ratio is the proportion of reserves that commercial banks are required to pay to the central bank. It is not the interest rate that savers receive directly, but it affects the liquidity of the banking system, which indirectly affects the overall pricing environment of deposits and loans.
? Why Should You Understand Deposit Reserve Ratio (RRR)？
While ordinary savers do not make deposits directly at the RRR, the RRR is a common macro signal when judging the interest rate environment, observing bank pull pressures and future deposit rate trends.
Key Points for Understanding This Term
- RRR changes are more reflective of the macro liquidity environment.
- It does not directly equal the deposit rate adjustment.
- When observing the RRR, it is best to combine the LPR, MLF and the bank's real interest rates.
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