(Bloomberg) -- China’s credit growth continued to accelerate in September, with an expected seasonal increase boosted by faster bond issuance in a month when the central bank acted again to guide borrowing costs lower.
Aggregate financing was 2.27 trillion yuan ($321 billion) last month, compared to about 1.98 trillion yuan in August, the People’s Bank of China said Friday. The median estimate by economists was 1.9 trillion yuan.
Key Insights
- Financial institutions offered 1.69 trillion yuan of new loans in the month, versus a projected 1.36 trillion yuan
- Broad M2 money supply grew 8.4% from a year earlier
- The PBOC moved to ease monetary conditions in September to encourage credit growth, cutting the amount of reserves banks have to hold by a full percentage-point and guiding the reference rate for loans lower
- Still, the PBOC has refrained from cutting interest rates like other major central banks, with Governor Yi Gang saying he’s “not in a rush” to add massive monetary stimulus. That’s raised doubts that even if policy does feed through to somewhat faster credit growth, it’s not enough to arrest the economy’s downward slide
- “The monetary easing implemented so far has neither been forceful nor effective,” China International Capital Corp. economist Eva Yi wrote in a note before the data. “We expect a further slowdown in growth momentum, rising deflationary pressure and a weakening labor market to push the government toward a stronger easing bias later in the year.”