China raises bank reserve levels to curb inflation

China's central bank on Sunday ordered most of the country's banks to raise the amount of money they hold in reserve in yet another move by Beijing to tamp down inflationary pressures.

The People's Bank of China said in a notice on its website that the deposit reserve requirement ratio for most banks will be raised 0.5 percent, starting Thursday. That means that large financial institutions will have to keep 20.5 percent of their deposits in reserve.
This is China's fourth reserve increase this year. Inflation in the world's second largest economy surged to a 32-month high of 5.4 percent in March.
Inflation, especially in food prices, is considered dangerous by China's leaders because it erodes economic gains that underpin the Communist Party's claim to power. Poor Chinese families spend up to half their incomes on food.
Communist leaders have declared fighting inflation a top priority and repeatedly assured the public the problem is under control.