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

RSS

Features & Analysis

  • Cartoon of women chatting on the metroChat wagon

    The interesting things you hear in a women-only carriage


  • Replica of a cargo boxSpecial delivery

    The man who posted himself to the other side of the world


  • Music scoreFinal score Watch

    Goodbye to NYC's last classical sheet music shop


  • Former Secretary of State Hillary Rodham Clinton checks her Blackberry from a desk inside a C-17 military plane upon her departure from Malta, in the Mediterranean Sea, bound for Tripoli, Libya'Emailgate'

    Hillary gets a taste of scrutiny that lies ahead


Elsewhere on the BBC

  • Audi R8Best in show

    BBC Autos takes a look at 10 of the most eye-catching new cars at the 2015 Geneva motor show

Programmes

  • A cyborg cockroachClick Watch

    The cyborg cockroach – why has a computer been attached to this insect’s nervous system?

Try our new site and tell us what you think. Learn more
Take me there

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.