China’s central bank said Thursday that it would further lower the amount of deposits banks have to set aside as reserves, releasing more liquidity into the nation’s financial system amid slowing economic growth.

The People’s Bank of China said it would cut banks’ reserve requirement ratio by 0.25 percentage point, which would bring the weighted average RRR level for the whole banking system to 7.4%. The cut, which won’t apply to banks whose reserve ratios are already at 5%, takes effect on Friday.

It…