China’s money supply expanded 12.4 percent

China’s money supply expanded 12.4 percent in January from a year earlier, marking the lowest pace in more than a decade amid tight liquidity in the markets, government data showed Monday.

The country’s M2, a broad measure of the money supply, reached 85.6 trillion yuan (US.6 trillion) last month, according to the People’s Bank of China (PBOC).

The growth pace of M2 in the world’s second-largest economy slowed from 13.6 percent on-year gain in December and was also lower than the 12.7 percent recorded in November.

M2 covers currency in circulation and all types of deposits with a maturity of less than two years at lenders and non-banking financial institutions, excluding those held by insurers and brokerage houses.

“Money supply growth decelerated reflecting cooling domestic demand and the continued pressure of capital outflows,” said Qu Hongbin, chief China analyst at HSBC.

“With inflation quickly shifting towards disinflation, the PBOC should be able to ease monetary policy more decisively in the coming months to stabilize growth.”

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