Reserve ratio hit a record high

Reserve ratio hit a record high
Dec 10, 2007 03:38
ICEBERG Points: Join Date: Sep 10, 2007 Status: offline	Last week, China top policy-makers announced to adopt a 'tight' monetary policy instead of the prudent one to 'prevent the economy from overheating and price rises from evolving into entrenched inflation.' This week, the central bank decided to raise the reserve requirement ratio about one percent to 14.5 percent from December 25, which has hit the record high since China unified reserve requirements about 20 years ago. This move means that top policy makers have started their steps to 'tighten' its economy. Talking about the impact of reserve ratio increase, those analysts have different opinions. Some say that it won't stop the bull market. However, it surely vibrates the stock market. On the other hand, it may make housing prices drop sharply. What do you think of reserve ratio increase? Will it help slow down the housing prices?

Dec 10, 2007 03:38

ICEBERG
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Join Date: Sep 10, 2007
Status: offline

Last week, China top policy-makers announced to adopt a 'tight' monetary policy instead of the prudent one to 'prevent the economy from overheating and price rises from evolving into entrenched inflation.' This week, the central bank decided to raise the reserve requirement ratio about one percent to 14.5 percent from December 25, which has hit the record high since China unified reserve requirements about 20 years ago. This move means that top policy makers have started their steps to 'tighten' its economy.

Talking about the impact of reserve ratio increase, those analysts have different opinions. Some say that it won't stop the bull market. However, it surely vibrates the stock market. On the other hand, it may make housing prices drop sharply.

What do you think of reserve ratio increase? Will it help slow down the housing prices?

Dec 12, 2007 20:05

JIMMYB
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Join Date: Feb 7, 2007
Status: Offline

Quote: Will it help slow down the housing prices?

Personally, I do not think that it can help slow down the housing prices. Although the state has raised reserve ratio ten times, the housing prices are not affected at all. It only set limits for those commercial banks. Those stated owned banks suffer little from reserve ratio increase. To slow down the house prices, the interest rates is the key.

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