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China Again Raises Reserve Ratio

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China Again Raises Reserve Ratio;A WALL STREET JOURNAL ONLINE NEWS ROUNDUP;April 5, 2007 7:35 a.m.;BEIJING -- China said Thursday it will raise the reserve requirement ratio for banks by half a percentage;increase this year, signaling a more aggressive approach to curbing liquidity and controlling investment gr;The latest increase, which will take effect April 16 and raises the ratio for most commercial banks to 10.5%;repeated interest-rate rises and investment curbs imposed on real estate, auto manufacturing and other indu;past year. The effort has had limited success in slowing the growth of investment.;In a brief statement on its Web site, the People's Bank of China said it will "use various tools to strengthen;liquidity in the banking system, maintain liquidity around suitable levels, and prevent overly rapid growth;PBOC added it will maintain a prudent monetary policy.;Economists expect similar reserve increases once every quarter this year to compensate for the swelling am;the banking system amid multibillion-dollar export surpluses.;Chinese leaders want to maintain rapid growth in the economy, which expanded by 10.7% last year. But th;excessive investment in real estate, factories and other assets will leave banks with dangerously high debts;bankrupt. Despite the controls, total investment rose by 24% last year, according to government figures.;Besides the two previous reserve ratio increases, Beijing also raised the benchmark lending and deposit ra;percentage point in March. These tightening measures come amid signs that China's monetary conditions;late last year after a series of control measures, had loosened.;Broad money supply, or M2, at the end of February rose 17.8% from a year earlier, faster than expected, w;loans in February totaled 413.8 billion yuan ($53.55 billion), compared with 149.1 billion yuan in the year;China's consumer price index in the first two months of this year rose 2.4% from the same period a year ea;government's target of an under-3% CPI rise this year, but higher than the 1.5% gain in 2006.;Write to the Online Journal's editors at newseditors@wsj.com1;URL for this article;http://online.wsj.com/article/SB117576700362660764.html;Hyperlinks in this Article;(1) mailto:newseditors@wsj.com

 

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