Home » Business News » 2011 » February » February 22, 2011 China Raises Bank Reserve Requirement Ratio

February 22, 2011 - Beijing's ( latest report shows that the People's Bank of China announced a rise in the bank reserve requirement ratio of 50 basis points from Feb. 24. reports that China's consumer price index, a main gauge of inflation, increased 4.9% in January, up from 4.6% in December.

The analyst of said that on Jan. 30 that keeping overall price levels under control by adopting a prudent monetary policy would be its top priority this year. Andmore importantly, the increase aims to control credit growth in the first quarter.

The analyst from said that China usually sees lending sprees every first quarter, as banks tend to give more loans at the start of the year to secure profits. Frantic lending in the first quarter last year for the full-year amount exceeding the government's ceiling of 1.14 trillion U.S. dollars. points out that China's banks extended 0.16 trillion U.S. dollars in new loans in January. The central bank may get tougher this year to prevent lending rush in the first quarter.

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