China Banks Push Up Lending Rates to Ration Credit
Instructions have come down from head offices to some bank branches, saying they must strictly abide by credit quotas this month, the China Securities Journal reported, with regulators keeping a closer eye than normal on lending activity as part of their campaign against inflation.
The China Business News said that banks had already lent 1.2 trillion yuan ($182 billion) as of January 24, putting them well on track to blow past limits that regulators had wanted to set for the first month of the year.
The article did not say whether banks also felt pressure to raise lending rates because of a spike in their own funding costs. The banking system has been bit by an unprecedented liquidity squeeze ahead of the Lunar New Year, driving money market rates skyward and compelling the central bank to inject cash in the economy despite its tightening bias.
[hat tip to Bill Grable over at greaterfool.ca]