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Beijing - China's central bank said on Sunday that it would raise lenders' required reserves by 50 basis points, the seventh time since October.
The move increases the required reserve ratio for the country's biggest banks to a record 20.5%, another step in the government’s campaign to absorb liquidity and control inflation.
It will lock up about 350 billion yuan ($53.6bn) of cash that banks would otherwise be able to lend, making it an important tool for slowing money growth.
In a short statement posted on its website, the People's Bank of China said the increase will be effective April 21.
The move will not come as a surprise - investors widely expect that China will continue to tighten monetary policy to cool inflation.
"This rise continues the tightening measures of the central bank," said Lin Songli, an economist with Guosen Securities in Beijing.
"The Q1 GDP shows that the whole economy is good, so there is still space for tightening."
China has been running an anti-inflation campaign in the past year in a bid to staunch price rises before they stir social unrest.
It has raised interest rates four times since October, slapped price control measures on certain commodities, and clamped down on property speculation.
Yet, persistent price pressures driven by soaring global commodity prices and abundant liquidity continue to plague the second-largest economy.
March's inflation data showed consumer prices rising to 5.4% in the year to March, the fastest rate since July 2008, from 4.9% in the first two months of the year.
The move increases the required reserve ratio for the country's biggest banks to a record 20.5%, another step in the government’s campaign to absorb liquidity and control inflation.
It will lock up about 350 billion yuan ($53.6bn) of cash that banks would otherwise be able to lend, making it an important tool for slowing money growth.
In a short statement posted on its website, the People's Bank of China said the increase will be effective April 21.
The move will not come as a surprise - investors widely expect that China will continue to tighten monetary policy to cool inflation.
"This rise continues the tightening measures of the central bank," said Lin Songli, an economist with Guosen Securities in Beijing.
"The Q1 GDP shows that the whole economy is good, so there is still space for tightening."
China has been running an anti-inflation campaign in the past year in a bid to staunch price rises before they stir social unrest.
It has raised interest rates four times since October, slapped price control measures on certain commodities, and clamped down on property speculation.
Yet, persistent price pressures driven by soaring global commodity prices and abundant liquidity continue to plague the second-largest economy.
March's inflation data showed consumer prices rising to 5.4% in the year to March, the fastest rate since July 2008, from 4.9% in the first two months of the year.
