Interbank rates have spiked to multi-year highs ahead of Chinese New Year. This partly reflects seasonal factors, but also that successive required reserve ratio (RRR) hikes are squeezing banks’ ability to lend. The trade surplus and financial inflows are still bringing in large quantities of foreign capital and, with inflation still high (and likely to rebound in January), policymakers will want to keep bank lending under control. As a result, at least one more RRR hike is likely before the end of the quarter, and another four or five over the rest of the year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services