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ICBC: Banks' reserve ratio to hit 15% in 2008

(Xinhua)
Updated: 2007-11-12 09:31

The Industrial and Commercial Bank of China (ICBC), the country's biggest lender, is predicting in a recent report that China's reserve ratio requirement for commercial banks will probably reach 15 percent in 2008.

China has raised the reserve ratio for nine times this year to a ten-year high of 13.5 percent in an effort to ease excess liquidity that is pushing the economy to the verge of overheating.

The report from ICBC's Institute of Urban Finance forecast that China's economy would grow at a sizzling pace of 11.3 percent this year, with the full-year inflation rate of 4.5 percent, compared with the government target of three percent.

The central bank was also predicted to raise interest rates for the sixth time this year amid growing concerns over rising inflation, according to the report.

"To make the real interest rate positive as soon as possible, the central bank is likely to raise the benchmark rates by another 27 basis points by the end of the year," said the report.

China's commercial banks would lend out a total 3.8 trillion yuan (US$506.7 billion) for the whole of 2007, compared with last year's 3.18 trillion yuan, said the report.

The M2, which covers cash in circulation plus all deposits, would grow by 18 percent this year, it added.