China’s new RMB loans stood at RMB1.47 trillion in January, beating market expectations of RMB1.35 trillion, and compares with RMB697 billion in December 2014, and RMB1.32 trillion in January, 2014, according to data released by the People’s Bank of China.
Outstanding total RMB loan grew 13.9% year-on-year in January, compared with last month’s 13.6% increase.
China’s M2, a broad measure of money supply, increased 10.8% year-on-year in January, lower than market consensus of 12.1% and last month’s 12.2% growth.
Total social financing stood at RMB2.05 trillion in January, slightly lowr than consensus of RMB2.1 trillion and December’s RMB1.7 trillion.
January’s weak broad money growth was due to tight fiscal conditions and likely continued capital outflows, writes Song Yu, Goldman Sachs/Gaohua’s senior China macro economist in a research report.
Given the current combination of macro data, he expects the government to lower the benchmark interest rate, including cutting bank reserve requirement ratio (RRR) further, and facilitate modest RMB depreciation.