People’s Bank of China Raised Reserve Requirement Ratio (To Stop Speculation in Salt?)18 March, 2011, 18:56. Posted by Zarathustra
Tags: Economy, Inflation, People's Bank of China
This is a bit unexpected, but the People’s Bank of China just announced that reserve requirement ratio for commercial banks will increased by 50 basis points, effective on 25 March 2011. After this latest hike, the new reserve requirement ratio should reach 20%.
I thought that China will be more cautious in tightening monetary policy further amid crisis in Japan, and I am not alone in thinking that way. Perhaps the Bank would like to stop people from speculating in salt prices, and they are taking some pre-emptive measures to counter the possible inflationary effect of the possible fall in exports volume from Japan, or perhaps the slight slowdown in the real estate market was not enough to make the government and the Bank happy.
As people were expecting the PBOC to enter a sort of wait-and-see mode, this is a big surprise, and does not bode well for stocks and real estate both in China and Hong Kong.
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