Warning to banks

The sooner-than-expected hike of the reserve requirement ratio for banks highlighted growing concern among Chinese authorities of overheating and inflation pressures.

To the surprise of most who did not anticipate a major policy move before the Spring Festival this mid-February, the People's Bank of China announced the ratio's hike on Tuesday. The increase, to take into effect next Monday, is the first of its kind since the global financial crisis hit bottom in late 2008.

The move can be viewed as the beginning of China's efforts to absorb excess liquidity. But it is far from certain if Chinese authorities will end the era of cheap money anytime soon.