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Higher amount of yuan loans issued
By Zhang Fengming |
November 12, 2010, Friday
|
Print Edition
Print Edition
BANKS in China extended 587.7 billion yuan (US$89 billion) in new yuan loans last month, more than estimated, the central bank said yesterday.
M2, the broadest measure of money supply, jumped 19.3 percent in October from a year earlier, the People's Bank of China said on its website.
The new loans in October came close to the 595.5 billion yuan in September, which was also stronger than expected.
China is tightening its monetary policy because of rapid loan growth, a 25-month high inflation and pressure arising from capital inflows due to the United States Federal Reserve's quantitative easing program.
The Consumer Price Index, the main gauge of inflation, rose 4.4 percent annually in October to a 25-month high, data showed yesterday.
Qu Hongbin, HSBC's chief economist in China, said that the bigger rise in new lending surprised the market and analysts.
"China's producer and consumer prices plus new lending numbers took both markets and policy makers by surprise in October," said Qu. "This explains for the sudden swath of tightening measures released just days or hours earlier by the central bank and the top currency regulator."
China on Wednesday required banks to set aside more capital from lending to rein in liquidity, a day before monetary and inflation data were released yesterday.
Commercial banks will face a 50 basis point rise in the reserve requirement ratio from next Tuesday.
China also surprisingly hiked interest rates on October 20, the first increase in nearly three years.
The one-year benchmark deposit rate rose to 2.5 percent from 2.25 percent while the one-year key lending rate went up also by 25 basis points to 5.56 percent.
Lu Zhengwei, an Industrial Bank senior economist in Shanghai, expects three to four more hikes in interest rates through next year, each of 25 basis points.
The World Bank said earlier this month that China needs to further raise its rates despite the pressure of capital inflows.
China has set a 7.5 trillion yuan target for annual new yuan loans this year, down from a record 9.6 trillion yuan extended in 2009.
In the first 10 months banks have already extended loans of 6.9 trillion yuan.
M2, the broadest measure of money supply, jumped 19.3 percent in October from a year earlier, the People's Bank of China said on its website.
The new loans in October came close to the 595.5 billion yuan in September, which was also stronger than expected.
China is tightening its monetary policy because of rapid loan growth, a 25-month high inflation and pressure arising from capital inflows due to the United States Federal Reserve's quantitative easing program.
The Consumer Price Index, the main gauge of inflation, rose 4.4 percent annually in October to a 25-month high, data showed yesterday.
Qu Hongbin, HSBC's chief economist in China, said that the bigger rise in new lending surprised the market and analysts.
"China's producer and consumer prices plus new lending numbers took both markets and policy makers by surprise in October," said Qu. "This explains for the sudden swath of tightening measures released just days or hours earlier by the central bank and the top currency regulator."
China on Wednesday required banks to set aside more capital from lending to rein in liquidity, a day before monetary and inflation data were released yesterday.
Commercial banks will face a 50 basis point rise in the reserve requirement ratio from next Tuesday.
China also surprisingly hiked interest rates on October 20, the first increase in nearly three years.
The one-year benchmark deposit rate rose to 2.5 percent from 2.25 percent while the one-year key lending rate went up also by 25 basis points to 5.56 percent.
Lu Zhengwei, an Industrial Bank senior economist in Shanghai, expects three to four more hikes in interest rates through next year, each of 25 basis points.
The World Bank said earlier this month that China needs to further raise its rates despite the pressure of capital inflows.
China has set a 7.5 trillion yuan target for annual new yuan loans this year, down from a record 9.6 trillion yuan extended in 2009.
In the first 10 months banks have already extended loans of 6.9 trillion yuan.
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