Reducing RRR means reducing the deposit ratio of commercial banks in the central bank. For commercial banks, more funds will be used for loans. Therefore, RRR's interest rate cut has controlled the problem of money supply side.
Interest rate reduction is the control of money price, that is, lowering the short-term, medium-term and long-term interest rates of banks, directly reducing the financing costs of enterprises and individuals, thereby improving the profitability of loan expenditures of enterprises and individuals and stimulating the demand for money on the demand side.
Because the interest rate is cut, that is, the interest rate of RMB is lowered, the depreciation of RMB may prompt capital flight.