China’s central bank Friday announced increase in the banks’ reserve requirement ratio (RRR) by 50 basis points from Dec 20 to curb lending amid accelerating inflation, reports Xinhua.The People’s Bank of China (PBOC) said on its website that the banks will have to set aside 18.5 percent of their reserves. The RRR has increased for the third time in a month.
PBOC data showed loans hit 564 billion yuan ($85.45 billion) in November. That means the annual lending would exceed the 7.5-trillion-yuan target set at the start of the year.
This could complicate the government’s management of inflation, which rose to a 25-month high of 4.4 percent in October.
To curb runaway liquidity, the central bank had raised the benchmark lending and deposit rates by 25 basis points Oct 20.
Analysts said the latest reserve requirement ratio increase could take about 300 billion yuan from the banking system.
