Banking News
- Central bank raises reserve ratios again
Date: 12-Nov-2007 Sources: (Shenzhen Daily)
THE central bank, battling to restrain growth in the money supply and inflation, announced it was raising the proportion of deposits that commercial banks must keep in reserve to a record high.
The 0.5-percentage-point increase in banks' reserve ratios, the ninth this year, will take effect Nov. 26 and bring the ratio for big banks to 13.5 percent, the central bank said Saturday.
Consumer price inflation has become a serious problem for the government this year as the economy expands at double-digit rates and China's ballooning trade surplus pours money into the real estate and stock markets.
Inflation hit a 10-year high of 6.5 percent in August, before declining slightly to 6.2 percent in September. October inflation data are due to be announced Tuesday, and financial markets are expecting a rate of at least 6.4 percent.
The central bank has also raised benchmark interest rates five times this year in an effort to keep bank deposit rates from lagging far behind inflation.
For most of the year, the financial markets have reacted calmly to the central bank's monetary tightening. But recent volatility suggests the latest reserve ratio increase could have a substantial impact on the markets.
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