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People's Daily Online>>China Business

Economists: Deposit-reserve ratio may be lowered at any time

By Ye Xiaonan (People's Daily Overseas Edition)

14:59, December 31, 2011

Edited and translated by People's Daily Online

The deposit-reserve ratio will be lowered once again in the first quarter of 2012, said Wei Jie, a professor of economics and management at Tsinghua University.

Wei said, “The tight-money policy will not be loosened, but the decrease of the funds outstanding for foreign exchange gives the deposit-reserve ratio a space to decline.”

Hu Yuyue, an economist, believes that it is quite possible that the deposit-reserve will be lowered in the near future. “Maybe the Central Bank will release the information of lowering it tomorrow or after the New Year of 2012.”

First, the Central Bank of Europe, Reserve Bank of Australia and Central Bank of Norway have all cut the interest rates.

Second, China's indexes, including the GDP, CPI, PPI, PMI and M2, are all slowing down, and the CPI of November was 4.2 percent and China's inflationary pressure has become lighter.

Third, China's banks and enterprises all have tight money and China's funds outstanding for foreign exchange is growing negatively.

Fourth, the “excessive regulation” on the deposit-reserve ratio has made the central bank pay a high price of interest.

Therefore, he predicts that the deposit-reserve ratio may be lowered two or three times in the first half of 2012.

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