After the strong GDP and high inflation report, the People’s Bank of China continued with its weekend/holiday action to demonstrate that they do not sleep (just like Citi). The People’s Bank of China increased the reserve requirement ratio by 50 basis points, effective on 21 April. That will bring the reserve requirement ratio to a record high of 20.5%.
The strong GDP and high inflation have pretty much made the hope for the end of tightening cycle vanished, and the government seems to be more determined than ever to curb prices and deflate real estate bubble. As liquidity is further tightened and as the tightening is being spilled over to Hong Kong, the latest move does not bode well for anything.
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This article originally appeared here: People’s Bank of China Increases Reserve Requirement Ratio By 50bp To A New Record
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