China to Order Banks to Raise Cash Reserves – David Barboza

From New York Times:

China said today that for the 10th time this year, it would order banks to raise the amount of cash they set aside, in order to curb inflation and prevent the economy from overheating.

The Central Bank said that it had ordered banks to increase their reserve ratios by a full percentage point, to 14.5 percent, in an effort to tighten the supply of money available for loans. It was the largest single reserve ratio move in four years.

Economists said the move showed that Beijing was growing increasingly worried about growing inflationary pressure and the threat of a severe economic downturn before next summer, when Beijing is set to play host to the Olympic Games. [Full Text]

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