The People's Bank of China (PBOC), the central bank, announced Friday that it would increase the bank reserve requirement ratio of 50 basis points beginning Feb. 24.
The hike, the second this year and the eighth since the beginning of last year, is the latest move to soak up liquidity and check inflation, according to expers.
The central bank move, which came only 9 days after the latest interest rate increase, means major banks will have to set aside 19.5 percent of their reserves while small and medium-sized banks will have to keep 16 percent of their deposits in reserves.
China's consumer price index (CPI), a main gauge of inflation, rose 4.9 percent in January, which was lower than market expectations, but was still higher than the 4.6 percent from last December.
The PBOC said on Jan. 30 that keeping overall price levels under control by adopting a "prudent" monetary policy would be its top priority this year.
