China on Monday announced that it would raise the amount of money banks must keep in reserve by half a percentage point in a bid to curb credit growth and help curb inflation.
The People's Bank of China said in a statement on its website that the commercial banks' reserve ratio would rise 0.5 percentages point to 16.5 per cent from May 20, less than one month after the last hike took effect.
The rise, the fourth so far this year, is 'in order to strengthen the management of liquidity in the banking system and to guide the rational growth in money supply and credit', the bank said.
Reserve ratio hike works by reducing the amount of money flowing through the economy, in turn limiting the funding available for purposes such as investment.
China is taking a tight monetary policy in order to rein in an inflation that has lingered at near 12-year highs.
The National Statistics Bureau said earlier on Monday that inflation rebounded to 8.5 per cent in April. It had weakened to 8.3 per cent in March from 8.7 per cent in February.
The People's Bank of China said in a statement on its website that the commercial banks' reserve ratio would rise 0.5 percentages point to 16.5 per cent from May 20, less than one month after the last hike took effect.
The rise, the fourth so far this year, is 'in order to strengthen the management of liquidity in the banking system and to guide the rational growth in money supply and credit', the bank said.
Reserve ratio hike works by reducing the amount of money flowing through the economy, in turn limiting the funding available for purposes such as investment.
China is taking a tight monetary policy in order to rein in an inflation that has lingered at near 12-year highs.
The National Statistics Bureau said earlier on Monday that inflation rebounded to 8.5 per cent in April. It had weakened to 8.3 per cent in March from 8.7 per cent in February.
Posts
No comments:
Post a Comment