China hikes banks' reserve ratio by 50 bps to 19 per cent
10 Dec 2010
The People's Bank of China today announced an increase in the amount of reserve money that lenders must maintain, for the third time in one month, in a bid to pull down rising inflation.
The central bank announced a 50 basis point increase in banks' reserve money, effective 20 December, taking the reserve ratio to 19 per cent for the country's big banks.
Banks, in fact, expected the Peoples Bank to raise reserve ratio by a much higher percentage points. Many banks also expect the central bank to raise reserve ratios next year.
The monetary tightening comes a week after China announced a shift to a "prudent" monetary policy from the "moderately loose" stance.
Consumer price inflation in China is expected to have hit 5.1 per cent in November, a 28-month high.