China has lifted the reserves required of lenders for the fourth time in just over two months as inflation continues to put pressure on policymakers, according to Reuters. On Friday, the People’s Bank of China announced that the reserve requirement ratio (RRR) for leading Chinese banks would be lifted by 50 basis points to 19.5%, which is a record high. The move comes after leaders vowed that controlling inflation would be the top priority of 2011.
Inflation was recorded at a 28-month high in December, so Dong Xian’an of Industrial Securities said the size of the RRR increase was “within market expectations.” The economist added that both interest rates and the RRR were likely to be raised “once or twice more in the first quarter.” The latest policy change is expected to remove about 350 billion yuan from the Chinese economy, and comes after the country’s foreign exchange reserves surged to a record $199 billion in the fourth quarter to reach $2.85 trillion, which increases pressure on leaders to take in excess liquidity.