The People's Bank of China hiked the reserve requirement ratio by 50 basis points despite the uncertain global economic outlook following the huge earthquake and nuclear crisis in Japan, the world's third-largest economy.

"This move -- coming after the Indian rate hike yesterday -- is another sign that the tragic events in Japan are unlikely to have a significant impact on policy decisions elsewhere in Asia," said Brian Jackson, a senior strategist at Royal Bank of Canada.

The move to restrict Chinese bank lending takes effect on March 25 and is the third time this year policymakers have announced such a measure.

It also follows three interest rate hikes since late last year as China pulls on a variety of levers to control soaring prices, which top leaders fear could lead to social unrest.

China's inflation rate has remained stubbornly high and in February came in at 4.9 percent, well above the government's full-year target of four percent, despite persistent efforts to reduce prices and ease growing consumer anxiety.

Premier Wen Jiabao told the country's legislature earlier this month that reining in prices was the government's "top priority" in 2011, as the country strives for a more balanced eight percent growth rate.

Analysts said the series of hikes in interest rates and the reserve requirement ratio appeared to be working -- though more would be required to keep lending under control.

"Money is coming into the economy all the time," said Mark Williams, an economist at Capital Economics in London.

"We know the central bank purchased $76 billion in foreign exchange in January so if it does not do something to offset that then banks will very easily be able to go on a lending splurge again."

The value of new loans issued by Chinese banks in February fell to 535.6 billion yuan ($81.5 billion), down from 1.04 trillion yuan in January, the central bank said earlier.

Data released Friday also showed more major cities in China saw a fall in house prices in February from the previous month.

The cost of a newly built home in eight of the 70 major cities tracked fell in February from January, the National Bureau of Statistics said. Just three cities had shown a decline in January.

While prices in 68 cities rose last month from February 2010, analysts said the month-on-month data showed official measures to rein in soaring house prices were kicking in.

The reserve requirement ratio for most large banks will rise to 20 percent following this latest move, said Williams, who expects the level to reach 22 percent by the end of the year.

The moves to tighten credit come as the leadership in Beijing also fends off calls for it to let the yuan currency trade more freely amid accusations it it being kept artificially high to boost its own exports.

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News