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China is highly likely to announce a targeted cut to the reserve requirement ratio (RRR) within the next few days to release extra liquidity and help companies get back on their feet after the coronavirus epidemic, several analysts said on Wednesday.

While expectations for the targeted RRR cut have been building up for some time, an executive meeting on Wednesday of the State Council, China's cabinet, which called for accelerated "targeted RRR measures," fueled further speculation. 

"After the State Council meeting, the central bank will likely follow up very soon. We could see a targeted RRR cut within the next few days," Li Daxiao, chief economist at Shenzhen-based Yingda Securities, told the Global Times on Wednesday, adding that the move could even come as early as this week.

Some market insiders project that the People's Bank of China (PBC), the central bank, could announce a cut of between 50 basis points (bps) and 100 bps. That could release between 300 billion yuan ($43.18 billion) and 700 billion yuan in liquidity for certain companies that have been impacted by the epidemic.  

Small and medium-sized enterprises (SOEs) might be the biggest beneficiary of the targeted RRR cut, according to Liu Xuezhi, an economist at Bank of Communications. "This is about help for companies that are facing difficulties with their cash flow," Liu told the Global Times on Wednesday.

The State Council meeting on Wednesday said that China will speed up the rolling out of inclusive targeted RRR measures to facilitate commercial banks' expansion of loans to SMEs and small businesses to help them resume operations and production, according to a statement following the meeting.

China has already allocated a total of 800 billion yuan in special and discount loans to companies producing essential supplies for the anti-epidemic effort and for SMEs to accelerate resumption of work. 

The speculation for the potential targeted RRR cut also came as central banks in major economies around the world mulled more measures to cope with the economic impact of the epidemic, with further interest rate cuts expected in the US and some other countries.

"That is the global environment we are in. Given the domestic situation, it is high time for the central bank to make a targeted RRR cut," Li said, adding that other measures are also possible.

A research note from Guotai Junan Securities on Wednesday said that the PBC might also lower the interest rate of the medium-term lending facility, or MLF, by 10 bps this month. "Even a direct RRR cut cannot be ruled out," the note said.

The PBC cut the RRR by 50 bps on January 6, which released around 800 billion yuan in liquidity. Liu Guoqiang, a deputy governor of the PBC, said late last month that the PBC would make targeted RRR cuts at the appropriate time to ensure sufficient liquidity.