China Soaks Up Banks’ Cash Again To Cool Economy – Jason Subler and Jerry Hua

From Reuters:

China’s central bank on Saturday raised the proportion of deposits that banks must hold in reserve for the eighth time this year, extending a campaign to prevent the world’s fourth-largest economy from overheating.

The half-point increase in the reserve requirement ratio, which will take effect on Oct. 25, brings the ratio for big banks to 13 percent — matching the record rate that was in effect from September 1988 to March 1998.

The People’s Bank of China (PBOC) said that the move, which comes a day after data that showed an unexpectedly strong expansion in money supply and lending, was meant to “strengthen management over liquidity in the banking system and prevent money supply and credit from growing too quickly”. [Full Text]

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