China Tells

China’s Central Bank announced to increase the Bank’s reserve ratio by another 0.5% in Feb 2010 to 16.5% for big banks (See Article from Bloomberg). Such a rate increase is the second time in the month and has caused a lot of suspicion in the market (See Article from NYT). During the last time that central bank raised the reserve ratio, the stock market reacted strongly by falling down at least 10% during 2 weeks. As it is still Chinese new year holiday, it remains to be seen how the market will react to it. Normally to increase the bank reserve ratio is a first ‘soft’ step from central bank to indicate a possibility of tightening. China’s base rate has been kept at 5.31% since January 2009.

央行在周五宣布，提高存款准备金率0.5%。这已经是一个月内央行连续两次提高存款准备金率，将最新的准备金率提升到了16.5%。目前看来央行要传达的信息是中国政府对银根过松的问题高度警惕，不太会容忍资产泡沫过大。但是央行动来动去也就是准备金率，而且对经济复苏的把握也不是很大，因此大幅度收紧货币政策的可能性也不会很大。