China’s central bank hikes reserve ratios for ninth time since October
14 Jun 2011
China's central bank, People's Bank of China, raised bank reserve ratios today for the ninth time since last October after data showed inflation increasing in May to 5.5 per cent, the highest it has scaled in three years.
The central bank hiked the ratio for China's biggest banks to 21.5 per cent, a record high, in a bid to lock up funds that could otherwise be loaned adding to inflationary pressures.
Chinese leaders aim to bring inflation under control this year, which is a top priority on fears that rising prices could not only unsettle the world's second-biggest economy but spark social tensions of the sort seen this week in southern China.
Citing data released today, analysts said though China's economic growth was slowing, the pace was not too fast which would provide relief for financial markets that China would avoid a hard landing and leaving room for Beijing to focus on fighting inflation.
Non-food consumer prices were up 2.9 per cent from a year earlier, the fastest pace since records started being kept in 2002. Analysts said this showed inflationary pressures were spreading more broadly in the economy and, for some, pointing to a rate rise this month.
The latest increase would come into effect from 20 June, the central bank said on its website.
