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Central bank authorizes special deposits

The Chinese central bank intensified its campaign to curb excessive liquidity by ordering selected smaller lenders to set aside money with the central bank as special deposits, state media said yesterday.

The central bank is asking some city commercial banks and credit cooperatives to place funds as three-month and one-year special deposits, Shanghai Securities News reported, citing unnamed banking sources.

The report said the yields of the special deposits were 2.91 percent and 3.44 percent respectively, parallel to those of central bank papers of the same duration.

China signaled yesterday that prices were rising sharply despite a range of policies that are aimed at cooling inflation and the economy in general.

Consumer price index rose 4.1 percent year-on-year in the first nine months of this year, state media said yesterday.

In the eight months to August, consumer prices rose 3.9 percent from a year earlier, while for the month of August they rose 6.5 percent, bringing inflation to its highest single-month level in more than a decade.
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