SHANGHAI (Reuters) – China is expected to adjust money and credit supplies in coming weeks, including cuts to interest rates or reserve ratio requirements, in order to counter “downside risks”, the official China Daily said, citing economists.
Stronger measures are required to maintain liquidity in the financial market and support infrastructure investment, the paper said. The moves are now more likely after data showed that China’s broad money supply and new yuan loans grew more slowly than expected in May.
Chinese banks extended 1.18 trillion yuan in net new yuan loans in May, up from 1.02 trillion yuan in April, People’s Bank of China (PBOC) data showed on Wednesday, but less than the 1.225 trillion yuan expected by analysts.
Broad M2 money supply grew 8.5% from a year earlier in May, below analysts’ estimates of 8.6%, and unchanged from April.
Citing experts, China Daily said financial institutions were facing tighter liquidity in June, with authorities requiring a higher credit expansion rate in order to meet economic growth targets and issue more bonds to finance new infrastructure.
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