Closer Look: The Dull Blades of the RRR

(Beijing) – The central bank's several adjustments to the reserve requirement ratio have made their dent in the fight against inflation – but it's also come at the cost of consumption demand. In contrast, raising interest rates may be a better option.

Small-and medium-sized enterprises have borne the brunt of the credit pinch with financing costs soaring far above benchmark rates. Meanwhile, some scholars have warned that the effects of monetary tightening policies may fall short of expectations, because banks are now looking for ways to circumvent regulatory restrictions on lending.