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Raising the bank reserve requirement

  • Published 28 Jan 2010

The central bank raised the bank reserve requirement by 0.5 percentage points on January 18. Is this a sign of more tightening to come?

Overheating has become the prime preoccupation of both policymakers and investors. Bank lending hit Rmb 1,100bn ($161bn, €114.2bn, £99.9bn) in the first two weeks of January alone, and inflation is returning. The People's Bank of China (PBoC), the central bank, raised the deposit reserve requirement ratio by 0.5 percentage points on January 18, the first time since the end of 2008. Last year, PBoC cut the ratio four times to stimulate growth. How much more tightening is ahead?

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