Saturday, 19 February 2011

Chile and China tighten

The monetary tightening trend continues in emerging economies.

Chile's central bank raised interest rates on Thursday. The Wall Street Journal reports:

After taking a short pause last month, the Central Bank of Chile raised interest rates and continued to withdraw the sizable monetary stimulus it began in 2009.

At its monthly monetary policy meeting Thursday, the bank increased its benchmark overnight rate by 25 basis points to 3.5%, in line with consensus.

The central bank reiterated that it will be "necessary" to continue withdrawing its stimulus in coming months, but the pace at which it does so will depend on how domestic and international macroeconomic conditions evolve.

Then on Friday, China raised banks' reserve requirement ratio again. AFP/CNA reports:

China's central bank said Friday it would raise the amount of money banks must keep in reserve, in the latest of a series of moves aimed at bringing high inflation under control.

The reserve requirement ratio will be raised by 50 basis points from February 24, the People's Bank of China said in a statement -- already the second time this year it has announced such a measure.

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