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Thread: Reserve Ratio increases again!!!

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[quote=FRANKENSTEIN,241417]Source: Xinhua News.

Since August 15th, the reserve ratio will increase 0.5% to 12%. Central bank announced last night. It is the nineth move since 2006.

What is reserve ratio? The amount of money those commercial banks must reserve at the central bank. Again, this move aims to curb the excess liquidity and rapid growth in lending. The expert said that China might be confronted with the potential inflation problem and the government should adopt some measures to avoid it.

China's GDP grew 11.9% in the second quarter, 11.5% in the first half. CPI reached or exceeded 3% in consecutive months. The food prices are also rising and rising. Meanwhile, the foreign exchange volume surpasses 1.33 trillion US dollars. To some degree, it escalates excess liquidity.

Some say that China's economy is overheated. Is it right? More policies and moves should be made to calm down the economy. However, former money policies including increasing the interest rate and decreasing the interest tax proves that they have not brought expectant results.

Will administrative means take effect to calm down the economy? No one can answer it. What do you think of these moves?[/quote]

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