China raises bank reserve ratio to curb rising prices

A teller counts Chinese yuan notes China's move is aimed at curbing the country's inflation

Related Stories

China has raised the limit on the amount of cash that the country's banks have to keep in reserves in an attempt to rein in rising prices.

The central bank raised the reserve ratio requirement (RRR) for banks by 50 basis points to 21.5%, a record high.

The move means that banks will have fewer funds available to lend, which may result in a slowdown in demand.

Latest data showed that inflation hit a 34-month high in May as consumer prices rose by 5.5% on an annual basis.

Analysts said that the central bank's prompt response is an indication that fighting rising prices is a top priority for the government.

"The government is doing something," said Barry Lam of CCB International.

"That is the key message the government is sending to the stock market investors and a warning to the banking system to be careful about their lending." he added.

Keith Bowman of Hargreaves Lansdown said that the central bank's decision was also an indication that authorities were wary of an overheating of the Chinese economy.

"A measured slowdown in the Chinese economy is just what investors want, with today's figures providing some hope that this is just what is unfolding," he said.

More on This Story

Related Stories

More Business stories



  • Member of staff at The National Archives in KewFree information?

    The reaction when 13 departments were sent the same FOI request

  • Andy Murray in action in the Australian Open semi finalTeam tennis

    Why it pays for players like Murray to have an entourage

  • Dippy on display in the Hintze Hall. Photo by Nathalie DiazFarewell to Dippy

    Your stories of the most famous dinosaur in Kensington

  • Motorists make their way over Hannahstown Hill on January 29, 2015 in Belfast, In pictures

    Wintry images of UK's most widespread snow so far this year

  • Composite picture of David Cameron and Nick Clegg on separate official visitsMarginal choices?

    New funds for your town - but is visiting minister after your vote?

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.