China Orders Banks to Boost Reserves as Prices Surge

Bloomberg
April 17, 2011

China increased banks’ reserve requirements to lock up cash and limit inflation after economic growth exceeded forecasts and consumer prices rose by the most since 2008.

Reserve ratios will rise a half point from April 21, the People’s Bank of China said in a one-sentence statement on its website today. The move, taking the requirement to 20.5 percent for the nation’s biggest lenders, came less than two weeks after the central bank boosted benchmark interest rates.

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Inflation accelerated to 5.4 percent in March and gross domestic product expanded 9.7 percent in the first quarter, a statistics bureau report showed two days ago. Central bank Governor Zhou Xiaochuan said yesterday that monetary tightening will continue for “some time” and he sees no “absolute” limit on how high reserve requirements can go.

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This article was posted: Sunday, April 17, 2011 at 8:11 am

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