ID :
150557
Sun, 11/21/2010 - 10:30
Auther :

China raises major banks' reserve ratio again


By Kim Young-gyo
HONG KONG, Nov. 19 (Yonhap) -- China has raised for the second time in two weeks
the deposit reserve requirement ratio for its major banks amid growing worries
over inflation, the country's central bank said Friday.
The People's Bank of China said on its Web site that it has hiked the reserve
requirement ratio for the country's deposit-taking financial institutions by an
additional 0.5 percentage point, effective Nov. 29.
The announcement comes only about a week after the central bank took the deposit
reserve ratio for other large financial institutions to 17.5 percent and that for
small- and medium-sized ones to 14 percent.
The reserve ratio refers to the percentage of customer deposits that banks are
required to set aside in cash. If the central bank increases the ratio, local
commercial banks will have less room in extending loans.
The Chinese central bank is seen as having taken the move in order to fight
mounting inflationary pressure, as the reserve ratio hike will help ease mounting
pressure on the country's interest rate.
Beijing had maintained for about two years a loose monetary policy introduced
during the global economic slowdown. In late 2008, the government pumped 4
trillion yuan (US$590.2 billion) into the market to counter the global crisis.
Some market watchers have raised concerns that prices for consumers are
continuously rising as the cheap money policy has led to increased market
liquidity.
Growth of the country's money supply has been accelerating and real estate prices
have been rising at double-digit rates.
Earlier this month, Chinese Premier Wen Jiabao said China's state council will
introduce measures to curb rising food prices.
His remarks came following an announcement earlier this month by China's National
Bureau of Statistics that the consumer price index increased to 4.4 percent in
October, up from 3.8 percent in September, mainly driven by a 10.1 percent
on-year increase in food prices.
ygkim@yna.co.kr
(END)

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