Friday, March 18, 2011

China Raises Bank Reserve Requirements to Cool Inflation

By Bloomberg News - Mar 18, 2011 10:00 AM MT

The proportion of lenders’ deposits that must be parked with the central bank will increase half a percentage point from March 25, the People’s Bank of China said on its website. Photographer: Nelson Ching/Bloomberg.

China ordered banks to set aside more cash for the third time this year, judging that inflation remains a bigger threat to the world’s second-largest economy than Japan’s earthquake and nuclear crisis.
Reserve requirements will increase half a percentage point from March 25, the People’s Bank of China said on its website yesterday. The ratio will rise to 20 percent for the nation’s biggest banks, excluding any extra limits for individual lenders.
Premier Wen Jiabao has set taming inflation as the nation’s top economic priority this year, citing “exorbitant” house- price increases and risks to social stability. China followed India, which raised interest rates the previous day, in tightening monetary policy even after Japan’s crisis roiled global stock markets and threatened to disrupt supply chains across Asia. Story here

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