China's central bank said today that it will raise the amount of money banks must keep in reserve, in the latest move to rein in lending and bring inflation under control.
The reserve requirement ratio will be raised by 50 basis points, the People's Bank of China said in a brief statement - the third time this year it has announced such a measure.
The move - effective from March 25 - follows three interest rate hikes since late last year as China battles 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%, well above the government's full-year target of 4%, 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 8% growth rate.
High inflation and lending activity has fuelled continued speculation of further interest rate hikes or other policy measures aimed at cooling the world's second largest economy.
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.
The move also comes as data out earlier today suggested recent policy tightening measures had been effective with more cities seeing 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.
Wen has said that the government would ramp up a campaign to construct affordable housing amid growing public concern over rising prices. China this year scrapped a nationwide property index and instead now publishes price changes for individual cities.
