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China Continues Tightening With Reserve Rate Rise

Chinese officials continued their fight against rapid price growth by increasing reserve requirements for the country’s banks in an ongoing period of monetary tightening, according to Bloomberg.

Chinese officials continued their fight against rapid price growth by increasing reserve requirements for the country’s banks in an ongoing period of monetary tightening, according to Bloomberg. On Saturday, the People’s Bank of China announced that it would increase the reserve ratio requirement by a half point to 20.5% for the biggest lenders on Apr. 21, which will mark the highest level on record. The move is the fourth reserve ratio increase since the beginning of the year.

The policy move also comes on the heels of a the fourth interest-rate increase by the central bank since the financial crisis, and Governor Zhou Xiaochuan said he expects monetary tightening to “continue for some time.” Zhou said policy would “move from moderately loose to prudent,” and added that he saw no “absolute” limit on how high the reserve ratio could go. Societe Generale is forecasting for an additional increase to interest rates as soon as May.

Click here to read the story from Bloomberg News.

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