SteelOrbis Shanghai
The People's Bank of China has decided to raise the RMB deposit reserve ratio of financial institutions by half a percentage point as of May 20, 2008. Following the adjustment, the deposit reserve rate will be 16.5 percent.
According to the figures released by China's State Bureau of Statistics on May 12, in the January-April period, the CPI rose by 8.2 percent compared with the same period last year, while the target set at the beginning of this year was only 4.8 percent. The lofty inflation rate is the main factor pushing the Chinese government to implement a stringent monetary policy. Looking at the current situation, since it is hard to solve the inflation problem in the short term, the bank deposit reserve rate is expected to be increased further in the future and an interest rate increase is also very likely in the coming period.