Central Bank reserve ratio raised for the first time in 2011

 People's Bank of
evening of March 14 announced that from January 20 yuan from financial institutions raised the deposit reserve ratio by 0.5 percentage points, this is the first time in 2011 the central bank tightening operation. After this increase, major financial institutions, the deposit reserve ratio will reach 19% of the peak, a rough estimate can be a one-time freezing of the banking system is about 350 billion yuan of liquidity.

economists believe that this increase is intended to hedge against excessive liquidity, but also in early January with nearly 500 billion in new loans related. Taking into account the first quarter of this year, the central counting up to 1.6 trillion due, as well as reserve with the difference in inhibition rate policy lending banks in the early blitz, is expected to raise the reserve ratio will continue. In the interest rate policy, since the current reality of the inflationary pressures and inflation expectations of residents are still high, the central bank statistics published on the 20th after a strong possibility of interest rates.

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factors contribute. First, last fiscal deposits out of a large number of not withdrawn from circulation. Second, in January foreign exchange estimates are still high, a conservative in the 400 billion is also expected to be up and down. Third, open market operations remain weak. In the last increase After interest, though open market operations rates up, but still large secondary market spread, operating weakness, and since then have directly made a net to maintain a continuous run. Lu political commissar of the scientists expected, in the first quarter, there may be 2 raised the reserve ratio.

At the same time, different tools will reserve ratio normalized. To specific operations, the central bank set the formula generally has two aspects, one estimates the monthly bank credit growth and GDP and CPI, and the deviation of the second is measured with the same type of each bank run bank rate and market share comparison, both of rapid growth in the bank will be different from adjusted.

agency also believes that the reserve ratio increase, but also shows the government anti-inflation. Dacheng Fund is expected, January CPI will be higher than last December, the first half of weather factors, there are a half months after the Spring Festival. Dacheng Fund believes that the short-term inflationary pressure is still large, the government recently has been, and will take further tightening of policy.

statistics show that the first week of January year on year rise in food prices rebounded slightly. Moreover, in normal circumstances, at the end to the Spring Festival period, food prices rose a larger chain, CPI was down or not is difficult to rule out the possibility of new highs. Institute of Finance, the State Council Development Research Center, deputy director of Ba said that from the historical comparison of view, interest rates tend to choose higher growth rate in GDP, inflation and negative interest rates are expected stronger the more serious time.

now appears that in December 2010 the trend of CPI, would become the central bank to raise interest rates in the near future the trigger conditions. Bureau of official data will only be released to go to 20, but now all the indications, CPI might not like the market expected a substantial decline. Short term, prices of agricultural products caused by climate anomalies up, commodity prices continue to go higher, will continue to promote the rise in CPI. Medium to long term, as economic recovery, increase the degree of economic activity, increase the velocity of money will lead to greater inflationary pressures. The idea that the CPI in December last year, or are still about 5%, inflation is more of a quarter can not be ignored. If the current policy tightening is not enough, the self-fulfilling inflationary price pressures will further increase.

According to media reports, the National Development and Reform Commission Zhou Wang, deputy director of the price the military has also said that if the domestic price pressures in the first quarter is too large, do not rule out the introduction of new regulatory initiatives. This statement by the market interpreted as a signal of inflation is still high.