Beijing, China (AHN) – Credit ratings agency Standard & Poor’s announced that it had downgraded its outlook for China’s property market to negative from stable over concerns about the government’s decision to tighten its credit policy.

China’s central bank announced on Tuesday that it planned to tighten credit to curb borrowing in the wake of soaring inflation in the country. The central bank on Tuesday effectively reduced the amount of cash the nation’s banks could lend with a decision to raise the reserve requirement ratio to a record high rate of 21.5 percent.

Raising the reserve requirement came on top of interest rate increases four times since October in an effort by the central bank to rein in inflation. The central bank also made those moves because the government is trying to prevent property prices from soaring to bubble-high prices.

Bei Fu, director of corporate ratings at S&P’s, explained that the agency expected the next six to 12 months would bring more negative rating actions for Chinese developers. Tighter credit in the country is expected to result in weaker property sales.

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