China Just Raised Its Reserve Ratio By 0.5%

zhou china chinese

A day and a half after reporting hot inflation numbers, the PBOC just came out with a new reserve ration increase on banks, hiking it by 0.5%, effective May 18.

Shanghai stocks were down hard overnight, perhaps on expectations of an imminent move like this.

The key thing to bear in mind is that the PBOC has been doing this a lot, and really hasn’t accomplished anything.

According to Bloomberg, the first tightening of the cycle came in January 2010.