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China lifts reserve ratio for 3rd time in 5 weeks
By Leo Zhang |
19:12 UTC+8 December 10, 2010
|
Online Edition
Online Edition
CHINA announced today it would ask commercial banks to set aside more capital from lending for the third time in five weeks as it tries to tighten liquidity amid mounting inflation.
The reserve requirement ratio for lenders on Chinese mainland will be boosted by 0.5 percentage point from December 20, the People's Bank of China said in a statement on its website.
After the increase, Chinese biggest lenders will have a reserve ratio of 18.5 percent while that of smaller banks 15 percent. The move is expected to freeze another 350 billion yuan (US$51 billion) of capital away from lending.
The move was widely anticipated and came just one day before the release of China's November consumer prices growth, which analysts expect may scale a new height within this year.
"That's exactly what we expected and may happen again in the next few months," said Wu Ke, a Zhongtian Investment Consulting Co analyst. "The central bank may also increase interest rates late this year or early next year to battle inflation."
Early this month, the Chinese central government announced a shift to a "prudent" monetary policy next year from the previous "moderately loose" stance.
The People's Bank of China also said today China's new yuan-denominated loans hit 564 billion yuan in November. The new lending figure left this year's total just 50 billion yuan short of the government's target maximum of 7.5 trillion yuan.
"Consumer prices growth will still be fast in the next several months," said Liu Yu, an Orient Securities Co trader. "More hikes in both interest rates and banks' reserve ratio are expected next year as strong manufacturing and exports offer the government more room for tightening."
China's imports rose 37.7 percent in November from a year earlier while exports jumped 34.9 percent, customs data showed today. Both figures topped analysts' forecasts, reflecting China's solid growth and the potential recovery of the global economy.
The reserve requirement ratio for lenders on Chinese mainland will be boosted by 0.5 percentage point from December 20, the People's Bank of China said in a statement on its website.
After the increase, Chinese biggest lenders will have a reserve ratio of 18.5 percent while that of smaller banks 15 percent. The move is expected to freeze another 350 billion yuan (US$51 billion) of capital away from lending.
The move was widely anticipated and came just one day before the release of China's November consumer prices growth, which analysts expect may scale a new height within this year.
"That's exactly what we expected and may happen again in the next few months," said Wu Ke, a Zhongtian Investment Consulting Co analyst. "The central bank may also increase interest rates late this year or early next year to battle inflation."
Early this month, the Chinese central government announced a shift to a "prudent" monetary policy next year from the previous "moderately loose" stance.
The People's Bank of China also said today China's new yuan-denominated loans hit 564 billion yuan in November. The new lending figure left this year's total just 50 billion yuan short of the government's target maximum of 7.5 trillion yuan.
"Consumer prices growth will still be fast in the next several months," said Liu Yu, an Orient Securities Co trader. "More hikes in both interest rates and banks' reserve ratio are expected next year as strong manufacturing and exports offer the government more room for tightening."
China's imports rose 37.7 percent in November from a year earlier while exports jumped 34.9 percent, customs data showed today. Both figures topped analysts' forecasts, reflecting China's solid growth and the potential recovery of the global economy.
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