Friday, January 14, 2011

China Raises Banks' Reserve Requirements, Again

You don't get a more schizophrenic monetary policy then the one on display in China. (And since EPJ is already banned by censors in China, I can call them schizophrenic without any further ramifications, unless they want to hunt me down in the U.S.)
China's central bank, the Peoples Bank of China, has announce it will raise banks' reserve-requirement ratio by half a percentage point, following six such increases last year, in the government's latest move to curb inflation.

At the same time they are battling inflation via the increased reserve requirement, the PBOC continues to print money. The printing is part of the PBOC's manged currency program whereby the PBOC maintains a below market rate for the yuan by printing money and propping up other currencies, such as the dollar. this money printing is, of course, highly inflationary.

Schizophrenia for sure.

1 comment:

  1. Hike takes effect Jan 20. Pres. Hu arrives in US day before.