The People's Bank of China, the central bank, raised the reserve requirement ratio by 0.5 percentage points for all financial institutions that accept deposits.

This is the fourth time this year the central bank raised the ratio, and it is expected to freeze liquidity of more than 300 billion yuan ($45 billion).

This move comes amid growing fears about inflation and speculative capital inflows, especially after the United States announced a second round of quantitative easing policy on November 3.

Zhang Ping, Chairman of the National Development and Reform Commission, predicted the CPI for the whole year will slightly exceed the government-set target of 3 percent.

By striking the banks' ability to lend, the reserve requirement ratio hike will help mop up excess liquidity and ease the pressure of consumer price inflation, said Zhuang Jian, a senior economist at the Asian Development Bank.