China's central bank raised bank reserve ratios on Tuesday for the ninth time since last October after data showed inflation rising in May to 5.5 percent, its highest level in almost three years.
The central bank increased the ratio for China's biggest banks to 21.5 percent, a record high, locking up funds that could otherwise be loaned out and add to inflationary pressures...
At 5.5 percent, China's consumer inflation in May was the highest in 34 months. It compared with expectations for 5.4 percent and showed a pick up from 5.3 percent in April.
One suspects that with a 21.5% reserve that they are pulling back strongly and that inflation expectations are quite large.Revaluing the Chinese currency will be reflected in increased US prices. That in itself will not be inflationary since there is such excess slack in employment. It will just put further downward pressure on those employed and otherwise.
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