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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.

 


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Fri, 03/18/2011 - 07:22 | Link to Comment Debtless
Debtless's picture

Those evil, yet somehow more responsible fiscally, chinese.

Fri, 03/18/2011 - 07:23 | Link to Comment The Axe
The Axe's picture

The dollar is still weak as a Chinese noodle, up for the risk trade until some time when this is over, Like NEVER..

Fri, 03/18/2011 - 07:26 | Link to Comment Pants McPants
Pants McPants's picture

Absorbing excess liquidity?  What in the hell does that mean?  Good thing the US of America doesn't subscribe to such nonsense. 

Fri, 03/18/2011 - 07:26 | Link to Comment The Axe
The Axe's picture

Bernanke says "Hell awaits those that want a strong dollar"! Oh wait that was the other asshole...

Fri, 03/18/2011 - 07:31 | Link to Comment SDRII
SDRII's picture

Now maybe some coordinated air strikes with the open set to the theme of squawk

Fri, 03/18/2011 - 07:32 | Link to Comment LongSoupLine
LongSoupLine's picture

I am now convinced the market can no longer go down, yet neither can gold and silver.

 

Go long the "recovery"!! (aka-Rus2k)

 

FU Bernank!

Fri, 03/18/2011 - 08:02 | Link to Comment Saxxon
Saxxon's picture

I continue to believe First World (using the phrase somewhat loosely) politicians and central bankers are terrified of what would happen if they let their markets take their natural course.  I believe 2007-2008 scarred their memories and any country that can freely print to levitate their stock markets, now just does so.  The DOW is Joe Sixpack's thermometer for economic optimism.

If the Bots' SELL algos ever kick in, the meltdown will be tremendous; and no 1st World politician can stop what their country's banks want to do.  If they want to short/sell to get their profits, they will in 1/100,000th of a second.

Fri, 03/18/2011 - 07:36 | Link to Comment Mal
Mal's picture

a Goldman Sachs report that sees gold at $1,480 in 3 month

Uh oh, that means The Goldman Sack plans on shorting gold into the basement.

Fri, 03/18/2011 - 07:56 | Link to Comment Bleeping Fed
Bleeping Fed's picture

The banks put it back in the wallet while the PBoC takes it right back out with POMO liquidity injections.  What a farce.

Sat, 05/21/2011 - 02:44 | Link to Comment jimmight
jimmight's picture

The banks put it back in the wallet while the PBoC takes it right back out with POMO liquidity injections.  What a farce.

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