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China’s Lending Move Drags Down Markets

U.S. and international markets moved lower during today’s session following China’s move to curb bank lending and cool down its economy. However, the losses were partially offset by more bullish confidence in the European Union following Greece’s troubles.

China’s announced an increase in bank reserve requirements by 0.5% for the second time in five weeks in order to limit lending to consumers and businesses. The country is hoping that the move will help slow down the country’s rapid economic growth.

The country’s Bureau of Statistics noted on Thursday that annual inflation had more than doubled in January versus the prior month, to 4.3%. Meanwhile, the average housing price rose 9.5% last month from a year earlier, which is the fastest rate in 19 months.

Luckily for the country, the rising asset prices have not yet impacted consumer prices, which had caused unrest in the past when eroding workers’ spending power. Obviously, this is a bad situation as it can lead to class division and other socioeconomic problems.

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