Reducing RRR indirectly benefits index funds. Reducing RRR is an expansionary monetary policy, which will make a large amount of capital flow into the stock market, and a large amount of capital flow will make the stock rise, while index funds mainly invest in a basket of stocks, so reducing RRR is also good for index funds.

RRR cuts interest rates in order to reduce the deposit reserve, which is the funds prepared by commercial banks in response to investors' withdrawal and liquidation. The RRR cut of the central bank is to reduce the funds of commercial banks in the central bank, and the reduced funds will be invested in credit or other markets, which will increase the funds in the market.