Sunday, April 17, 2011

People's Bank of China Raises Reserve Requirements 50bps

The People's Bank of China announced a further increase to the required reserve ratio of 50 basis points, bringing the average ratio for large banks to 20.5% from 20.0%, as of 21 April 2011.  The move came as China reported higher inflation of 5.4% in March, up from 4.9% in February driven mostly by a spike in food prices (in spite of the People's Bank of China Price Expectations Index falling to 72.8 from 82.7).  The increase in the ratio followed statements by Bank Governor Zhou Xiaochuan that monetary policy tightening would continue for some time, with controlling inflation remaining a key priority for the Chinese authorities.


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