Saturday, 11 December 2010

China raises reserve requirement

There was no action from the Bank of England on Thursday but the People's Bank of China made a move on Friday. From AFP/CNA:

China's central bank said Friday it would raise the amount of money banks must keep in reserve as Beijing ramps up efforts to contain inflation, rampant lending and soaring housing costs.

The People's Bank of China said it would increase the bank reserve requirement ratio by 50 basis points, marking the sixth such move this year and highlighting the growing anxiety among top leaders over inflationary pressures.

The central bank said in a one-line statement on its website that the increase in the reserve ratio -- which effectively limits the amount of money banks can lend -- would be effective December 20.

The move came after data released earlier Friday showed property prices and new lending remained stubbornly high in November despite persistent government efforts to stem the flood of liquidity into the world's second-largest economy.

Also out from China on Friday was the November trade data. Again from AFP/CNA:

China said Friday that exports and imports hit record highs in November, which analysts said would ramp up pressure on Beijing for further interest rate hikes and a stronger currency...

Exports increased 34.9 percent in November from a year earlier to US$153.3 billion, while imports rose 37.7 percent to US$130.4 billion, according to the data.

US trade data were also out on Friday, as were consumer confidence. Bloomberg reports:

Confidence among U.S. consumers increased in December to a six-month high, coinciding with stronger holiday sales that show the economy is gathering speed.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 74.2 from 71.6 at the end of November. A Commerce Department report showed the U.S. trade deficit shrank more than forecast in October to $38.7 billion as growing economies overseas propelled exports to a two-year high.

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