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Reserve hike addresses liquidity and inflation

11-11-2010 13:56 BJT

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Experts say that this central bank move is to combat the US Fed reserves' quantitative easing. Let's take a look at what this does to the economy.

Analysts say the central bank's latest measures are due to fast-rising consumer prices, and excessive lending in October.

Experts say the move also indicates increasing pressure faced by the central bank amid excessive liquidity on the global market, and inflationary pressure.

Analysts also say the decision is a message to contain inflows of hot money. Prices of gold and bulk goods have been pushed higher on the international market, after the second round of quantitative easing by the Federal Reserve.

Yin Zhongli, Researcher of China Academy of Social Sciences said "The central bank's adoption of this new policy to replace a previously looser monetary policy, in some ways, is to counter the impact of the Fed's quantitative easing. "

Analysts say the policy will have an effect on the real estate market and will help contain property prices, as banks tightens lending to both developers and home buyers.

Editor:Xiong Qu |Source: CNTV.CN

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