PBOC Hikes Reserve Ratio For Third Time In 2011 By 50 bps

Tyler Durden's picture

As if yesterday's revised Plaza accords was not enough, the complete domination of markets by central planners, er, banks continues as the PBOC has just announced another 50 bps hike in its RRR. Per RTT: "The
People's Bank of China on Friday lifted commercial banks' reserve ratio
for the third time this year to absorb excess liquidity in the system.
The
reserve requirement ratio (RRR) of commercial banks was raised by 50
basis points. New rate will be effective from March 25, the central bank
said in a statement. Last year, the bank had raised reserve
ratio six times. With the latest hike, larger banks will have to set
aside 20 percent as reserves." And who can blame them: following yesterday's actions by the BOJ and the Japanese government inflation is certain to surge as fresh trillions are set to hit the money markets, and the last thing China needs is to import even more inflation. And surprisingly one commodity which should have fallen on the news, gold, is completely impervious to the PBOC's action and has moved to over $1416 overnight, a move driven exclusively by the surge in MENA risk and imminent money printing. Also a Goldman Sachs report that sees gold at $1,480 in 3 months (to come momentarily) certainly did not hurt the price action. Brent on the other hand has seen its ascent stopped for the time being, however not for long.