China hikes bank reserve ratio in fight against inflation

20:26, December 10, 2010      

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China's central bank Friday announced the third increase of the reserve requirement ratio (RRR) for banks in a month to curb runaway lending amid accelerating inflation.

The People's Bank of China (PBOC) said on its website that it would lift the bank reserve requirement ratio by 50 basis points from Dec. 20.

Banks will have to set aside 18.5 percent of their reserves after the sixth such hike this year.

PBOC data showed new yuan loans hit 564 billion yuan (85.45 billion U.S. dollars) in November. That means the full-year lending total would exceed the 7.5-trillion-yuan target set at the start of the year. This could complicate the government's management of inflation, which rose to a 25-month high of 4.4 percent in October.

To curb runaway liquidity, the central bank raised the benchmark lending and deposit rates by 25 basis points on Oct. 20.

Analysts said the latest reserve requirement ratio increase could take about 300 billion yuan from the banking system.

Source: Xinhua

(Editor:张茜)

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