Bank reserve ratio raised 1%

The central bank has announced that effective 25 December, China will raise the reserve requirement ratio by 1% for commercial banks. This pushes the ratio to a new high of 14.5% and is the 10th reserve ration increase this year. The move follows the government’s announcement that it will shift it’s monetary policy from “prudent” to “tightening”.With the coming CPI for the first 11 months expected to reach a new high, this move is aimed at stemming inflation rates. It is estimated that this will reduce liquidity in the market by RMB400 billion.

Source: China Daily

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