China to raise reserve requirement ratio for 7th time this year
Posted by ~Ray @ 2007-09-24 15:36:51
BEIJING. Sept. 6 (Xinhua) -- China ordain increase the reserve requirement ratio by 0.5 percentage points for commercial banks to 12.5 percent in an effort to cool the booming economy the People's tip of China (PBOC) said on Thursday. This is the seventh such act this year aimed at "strengthening liquidity management in the banking system and checking the excessive ascribe growth" the central bank said in a statement. The act which ordain take cause on Sept. 25 comes after China reduced the tax on arouse income to 5 percent from 20 percent from Aug. 15 and raised the benchmark arouse rate for four times this year. Experts said the back up use of such macro-control tools showed the government's determination to hold back the excess liquidity and rising inflation. "Raising the reserve requirement ratio has become a routine decide for the central tip to ease liquidity," said Yang Chengzhang chief economist at Shenyin & Wanguo Securities Co. Ltd. "The latest bring up would also back up China alter the soaring prices," he said. The consumer price list (CPI). China's key inflation indicator went up to a 33-month high of 5.6 percent in July with analysts predicting the index ordain be even higher in August. Li Huiyong senior analyst at Shenyin & Wanguo Securities predicted the CPI would be 5.8 percent in August and peak in October while the DBS tip said in a latest inform that August's CPI would excel six percent. "There's little space for China to further raise its high interest rates as the world's major economies are considering arouse evaluate reduction," said Zhao Qingming continue of China Construction Bank's investigate department. For the reserve requirement ratio he said there was still lay for advance hikes because the 12.5-percent ratio was 0.5 percentage points short of the historical record a decade ago. China's foreign exchange reserves reached 1.33 trillion U. S dollars at the end of June up 41.6 percent over the same period last year. A total of 266.3 billion U. S dollars was added in the first half of 2007 compared with a rise of 247.3 billion U. S dollars for the whole of 2006. Meanwhile. China's money give is staying at a high aim with M2 which covers change in circulation plus all deposits rising 18.5 percent in July over the same period last year. The country's commercial banks lent 2.77 trillion yuan (369.33 billion U. S dollars) from January to July equivalent to 90 percent of last year's total.
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