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The reserve rate rise, which followed an increase in benchmark bank interest rates on April 5, was the seventh since China stepped up efforts against inflation in October and underscored the government's determination to keep the economy on an even keel.

The move was not a surprise -- investors predicted more tightening after last week's data showed an acceleration in inflation, and more worryingly, sustained capital inflows that threaten to keep inflationary pressure high.

"This rise continues the tightening measures of the central bank," said Lin Songli, an economist with Guosen Securities in Beijing. "The first-quarter GDP shows that the whole economy is good, so there is still space for tightening."

The central bank has also raised interest rates four times since October, slapped price control measures on certain commodities, and clamped down on property speculation.

But price pressures driven by soaring global commodity prices and abundant liquidity continue to plague the Chinese economy.

Central bank chief Zhou Xiaochuan said on Saturday that policy tightening will continue for sometime, as inflation is higher that the government is comfortable with.

And last week, Premier Wen Jiabao signaled a hawkish stance for the coming months, saying that the government would use all tools at its disposal to wrestle inflation under control.

The 50-basis-point increase, effective from April 21, lifted the required reserve ratio for the country's biggest banks to a record 20.5 percent. It will lock up about 350 billion yuan ($53.6 billion) of cash that banks would otherwise be able to lend.

MORE TIGHTENING AHEAD

The latest economic data showed China's turbo-charged economic growth barely slowed in the first quarter, giving the government more confidence to press ahead with policy tightening.

"I think there will be more required reserves hikes in the coming months, or even this month, but the possibility of an interest rate rise this month is not that big," said Zhu Jianfang, chief economist at Citic Securities in Beijing.

The latest Reuters poll conducted on April 6 showed analysts believe the central bank will raise banks' required reserves three times this year by a total of 150 basis points and increase interest rates just once more this year.

But although economists have argued recently that the central bank was near the end of its interest rate tightening cycle, China's economic growth is still cruising near double digits and the scope for China's government to continue tightening may be bigger than previously anticipated.

"The inflation picture is still worrisome and bank lending rebounded in March," said Zhao Xijun, economist at Renmin University in Beijing. "I think the central bank will raise interest rate in the coming weeks -- probably in June."

WORLD BANK PRESIDENT ROBERT ZOELLICK

ON RISING FOOD PRICES

"Of particular concern is food prices. This is the biggest threat today to the world's poor, where we risk losing a generation. ... Already 44 million people have fallen into poverty as a result of rising food prices over the last year. We estimate that a further 10 percent rise in the food price index could push 10 million more people into poverty."

ON THE MIDDLE EAST

"Policy will be as important as money. We must act now. Waiting for the situation to stabilize will mean lost opportunities. In revolutionary moments, the status quo is not a winning hand."

MEXICAN CENTRAL BANK GOVERNOR AUGUSTIN CARSTENS

(in interview with Reuters)

ON IMPACT OF U.S. SOFTNESS

"The indicator to which Mexico has a closer correlation is industrial production. And as the recent figures show, industrial production in the U.S. is performing relatively well. So even though I acknowledge that there have been some mixed figures about the U.S. economy, we still are optimistic about the evolution of the Mexican economy."

ON RISING ENERGY COSTS

"The pricing rule that Mexico follows for gasoline sort of eliminates some of the volatility from our CPI so that's one advantage that we have. But especially in grains and other food items volatility is very important for us because food is a very high component of our CPI."

ON RATES OUTLOOK

"We are following a very cautious approach. If we see that commodity prices are not only having a one-off impact on CPI but is affecting in a more fundamental way the dynamics of price setting in Mexico and is also feeding into inflationary expectations, at that point we might decide to adjust our monetary policy stance."

GREEK FINANCE MINISTER GEORGE PAPACONSTANTINOU:

ON RECOVERY:

The steering committee of the International Monetary Fund, comprised of finance officials from around the world, addressed the increasingly contentious issue as emerging markets grapple with an inflationary inflow of "hot money" that they blame on low interest rates in the United States and other advanced economies.

"Giving due regard to country-specific circumstances and the benefits of financial integration, such an approach should encompass recommendations for both policies that give rise to outward capital flows and the management of inflows," the panel of IMF member nations said in a communiqué.

The IMF this month endorsed use of capital controls, a tool once considered anathema to its free-market philosophy, but advanced countries want to establish a framework to monitor the policies governments use, an approach emerging markets oppose.

"Ironically, some of the countries that are responsible for the deepest crisis since the Great Depression and have yet to solve their own problems are eager to prescribe codes of conduct to the rest of the world," Brazilian Finance Minister Guido Mantega said, "including to countries that are overburdened by the spillover effects of the policies adopted by them."

Brazil, which has one of the highest official interest rates at 11.75 percent, is among emerging economies that have taken repeated steps to try and curb large inflows of money. But the need to also combat rising inflation has complicated the problem, with central bank rate hikes designed to cool growth feeding the inflows of capital.

Brazil and others point at the U.S. Federal Reserve's zero interest rate policy, which they say leads investors to pour money into their economies in search of higher returns.

Singapore Finance Minister Tharman Shanmugaratnam, the chairman of the IMF steering committee, said the problem was not just not just an emerging market phenomenon but also a "global inflation and interest rate problem."

The steering committee said the global economy was strengthening but that policy action was needed given "significant risks" threatening the recovery.

"Credible actions are needed to accelerate progress in addressing challenges to financial stability and sovereign debt sustainability, and to ensure timely fiscal consolidation in advanced economies," it said.

It also called for further work toward widening the basket of currencies that compose the fund's accounting unit, the Special Drawing Right.

Leading world economies have been working on a plan to include the Chinese yuan in the SDR basket, but progress has been slow. That's partly because of China's policy of keeping the yuan on a tight leash. SDR currencies are supposed to be "freely usable."

PUTTING FISCAL HOUSES IN ORDER

Some finance officials said ultra-loose monetary policies and rising budget deficits in the United States and other advanced countries pose a threat to the world's recovery from the worst recession since World War Two.

"The fiscal situation in the advanced economies gives us great concern, and it is in this area that we see the major risks to the global economy," Russian Finance Minister Alexei Kudrin told the IMF's advisory panel.

Resistance to limiting capital controls, a sensitive topic for economies inundated with inflows of inflationary "hot money" from countries with low interest rates such as the United States, was widespread among emerging market finance leaders at a weekend International Monetary Fund meeting here.

"We oppose any guidelines, frameworks or 'codes of conduct' that attempt to constrain, directly or indirectly, policy responses of countries facing surges in volatile capital inflows," said Brazilian Finance Minister Guido Mantega.

The IMF this month endorsed use of capital controls, a tool once considered anathema to its free-market philosophy, but advanced countries want to establish a framework to monitor the policies governments use, an approach emerging markets oppose.

"Ironically, some of the countries that are responsible for the deepest crisis since the Great Depression and have yet to solve their own problems are eager to prescribe codes of conduct to the rest of the world," Mantega said, "including to countries that are overburdened by the spillover effects of the policies adopted by them."

Brazil and others point at the U.S. Federal Reserve's zero interest rate policy, which they say leads investors to pour money into their economies in search of higher returns. These flows are stoking inflation and pushing currencies higher in emerging markets.

The G24 group of developing nations, which includes Brazil and India, urged the IMF on Thursday to take an "open-minded and even-handed approach" to managing capital inflows.

The fund should focus on understanding the effects of "policies that spill across borders," Central Bank of Chile Governor Jose De Gregorio said on Saturday.

The G20 group of leading developed and emerging economies delayed a final decision on when countries can use capital controls on Friday and agreed to keep working on a framework.

But French Finance Minister Christine Lagarde, whose country is G20 president this year, said "it seems vital to have a common set of rules" on how to manage capital flows.

Mexican Finance Minister Ernesto Cordero said capital controls "should only be used as a last resort."

"Thankfully, there are only a few countries considering these measures," he said.

PUTTING FISCAL HOUSES IN ORDER

Some finance officials said ultra-loose monetary policies and rising budget deficits in the United States and other advanced countries posed a threat to the world's recovery from the worst recession since World War II.

"The fiscal situation in the advanced economies gives us great concern, and it is in this area that we see the major risks to the global economy," Russian Finance Minister Alexei Kudrin told the IMF's advisory panel.

Although global tensions over the possibility of currency wars and Europe's growing debt crisis continue to simmer, finance ministers in Washington for semi-annual talks also took sharp aim at the United States' $14 trillion debt.

While most of the criticism came from emerging market economies, some rich nations also joined the chorus.

"The fiscal situation in the advanced economies gives us great concern, and it is in this area that we see the major risks to the global economy," Russian Finance Minister Alexei Kudrin told the International Monetary Fund's advisory panel.

The IMF this week noted that the U.S. budget deficit was on course to hit 10.8 percent of nation's economic output this year, tying Ireland for the highest deficit-to-GDP ratio among advanced economies. It urged Washington to move quickly to put a credible plan in place to tighten its belt.

The Obama administration and the U.S. Congress have engaged in a big battle over how best to reduce the red ink. Republicans have sought to use the need to raise the nation's $14.3 trillion debt limit to avoid a default as a lever to extract deep spending cuts.

The Republican-led House of Representatives on Friday approved a plan to slash spending by nearly $6 trillion over a decade and cut benefits for the elderly and poor.

President Barack Obama, who has offered a competing vision to curb deficits by $4 trillion over 12 years, said on Thursday the Republican plan would create "a nation of potholes."

The White House has been wary about withdrawing fiscal support for the economy too quickly, and Treasury Secretary Timothy Geithner told fellow finance ministers on Saturday caution was needed.

"We are committed to fiscal reforms that will restrain spending and reduce deficits while not threatening the economic recovery," he said.

But even as Geithner said the United States recognizes the need to address its budget deficit, he was quick to say that others whose practices contribute to global imbalances must also change.

"However, others, especially those whose fundamentals call for greater exchange rate flexibility, must also contribute," Geithner said.

The United States has repeatedly called for China to relax its limits on the yuan currency.

Dutch Finance Minister Jan Kees de Jager warned that if the United States and other advanced nations move too slowly it could undermine confidence in the global economy.

"Insufficient budgetary consolidation may spark off further escalation of debt sustainability issues, with repercussions on confidence and the still fragile financial sector," de Jager said. "Debt dynamics in other advanced economies, including the United States, are of concern."