The PBOC surprised some by lowering the reserve requirement for the Chinese banking system this morning. That marks the sixth reduction since February 4 last year, totaling 350 bps (the reduction on April 19 was 100 bps). By orthodox calculations, that should have added about RMB 2.45 trillion in new “liquidity” as banks freed from holding reserves would have forwarded the newer margins into at least interbank.

China’s central bank said it will lower the amount of deposits banks hold in reserve by 0.5 percentage point, as a burgeoning liquidity shortage outweighs its concerns over the impact of more credit-easing on the Chinese currency.

The action, which the People’s Bank of China announced late Monday and which will take effect Tuesday, will free up about 700 billion yuan, or about $108 billion, in funds for banks to make loans, analysts estimate.

Both of those paragraphs contain inconsistencies; to the first quoted paragraph, the burst of “credit-easing” in January may not have been so much enthusiasm as dramatic concern, as I wrote here. In other words, banks rushed to achieve whatever volume while they could, knowing full well that it might get ugly very quickly. In that view, the “more credit-easing” is actually a reflection of the “burgeoning liquidity shortage.”

The second paragraph assumes a vacuum that doesn’t exist. The real world contains no clinical type conditions for ceteris paribus, of course, but at least in China prior to March 2015 expansion in bank reserves suggested a uniform backdrop for these kinds of policy measures. Since March, however, bank reserves have been declining as the PBOC’s balance sheet sinks. It has not been a straight line and there are indeterminate multiplier effects to consider, which means the exact calculation and nature is more of a guess than hard math, suggesting why the reserve reductions appear just as irregular.