PBOC raises deposit reserve ratio by 0.5%

The People's Bank of China (PBOC), the country's central bank, announced that RMB deposit reserve ratio would be increased by 0.5% to 15.5% from Mar. 25, in a bid to further implement tightening monetary policies and cool the economy.

It is the second such increase of the year as concerns lingered about greater pressure of liquidity and inflation in the world’s robust economy. Prior to this, the central bank lifted up the deposit reserve ratio by the same 0.5% to 15% from Jan. 25, 2008.

Last year, Chinese regulators put up the ratio for a total of ten times, ended up at 14.5% on Dec. 25, 2007.

Analysts agreed that the move was signaling that China decided to act first on controlling price increases after Premier Wen set inflation control as a top priority for 2008, and expected the reserve ratio could possibly jump to 17% this year.