China continues to drive and surprise the world economy. An overnight release that China’s banks would be required to increase their reserve requirements sent ripples throughout global currency, commodity and equity markets. The surprise announcement also served to give notice that China would not tolerate the lax lending policies western countries utilized to ignite the recession.
The People’s Bank of China had raised the reserve requirement last month. A second increase was projected but not expected this quickly. Global markets reacted with concern. Fearing that a tightening of credit would harness world economic growth, all commodity markets reeled.
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