Monetary Policy Frequently Adjusted

In 2007, China raised the reserve requirement ratio 10 times and interest rates, six times.

The central bank raised the reserve requirement ratio from 9 percent at the start of the year to 14.5 percent as of December 25.

The 10th hike came immediately after the Central Economic Work Conference, which set the tone for the next year's economic development to "follow a tightened monetary policy from the previous prudent one."

The central bank stated that the repeated hikes were aimed at "strengthening liquidity management in the banking system and checking excessive credit growth." It would take diversified monetary measures to cool the economy in the future.

The central bank also raised the benchmark one-year deposit rate from 2.52 percent at the end of 2006 to the current 4.14 percent. The one-year loan rate was raised from 6.12 percent to the present 7.47 percent.

The decade-high CPI forced the central bank to take such actions. The repeated interest rate hikes were also meant to cool down the overheating stock and real estate markets.