China's central bank raises reserve requirements to curb inflation.

247_ Lu Miranda - The Central Bank of China raised the reserve requirement ratio for the fourth time this year, the portion of all demand deposits that commercial banks are required to hold in the central bank's reserves. The increase was 0,50 percentage points and will take effect from next Thursday (21).

This measure is yet another attempt to curb rising inflation in the country. Last Friday, the Consumer Price Index (CPI) was released, showing an increase of 5,4% in March, the highest level in 3 years.

With the increase in the mandatory deposit requirements for banks, the government inhibits the supply of credit by financial institutions and, consequently, domestic consumption, which, when heated, generates higher prices.

For global markets, the measure by the Chinese central bank could mean a decrease in the purchase of raw materials from other countries. This is a fear that is generally a source of stress among investors in stocks and, especially, commodities.