China Monetary Policy


China: New yuan loans and M2 pick up in June

July 12, 2011

Credit growth accelerated in June in spite of the ongoing aggressive monetary tightening policy. New yuan loans totalled RMB 634 billion (USD 98 billion) in June, which was above the RMB 623 billion expected by the market as well as the RMB 552 billion tallied in May. The Central Bank hiked the 1-year lending rate by 25 basis points to 6.56% in early July, the fifth time in eight months, in order to curb inflation. Meanwhile, M2, the broadest measure of money supply rose 15.9% year-on-year, overshooting both May's reading of 15.1% increase and market expectations of a 15.3% rise. Some analysts consider the strong expansion in M2 and new yuan loans seen in June as temporary, as banks may have boosted lending to meet quarter-end targets.


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