China Moves to Curb Inflation by Tightening Bank Credit |
| New York Times - Feb 12, 2010 |
For the second time in less than five weeks, China’s central bank has moved to limit lending to consumers and businesses by ordering big commercial banks to park a larger share of their deposits at the central bank.
The step, announced late Friday, came earlier than most economists had expected and was aimed at forestalling a rekindling of inflation by controlling a rapid expansion in bank loans. Families, real estate developers and industrial companies have been borrowing heavily and have started paying more for everything from food to apartments.
While the central bank announced its action after the close of markets in China, it provoked an immediate reaction elsewhere. American stock-index futures fell nearly 1 percent, a slide that was replicated when United States stock markets opened for trading on Friday. Commodity prices also tumbled as investors interpreted the action as likely to trim China’s demand and possibly limit inflation, with oil and copper prices each down more than 1 percent.
Read Full Article from New York Times
- Posted: 2010-02-12 11:08:33
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