According to the report from the People's Bank of China (PBoC), in May, Chinese banks provided new loans in yuan in the amount of 0.950 trillion yuan. Therefore, credit growth accelerated compared to April (0.730 trillion yuan). Economists had expected lending to grow by 1.3 trillion yuan.
Meanwhile, total social financing grew by 2.070 trillion yuan compared to a drop of 72 billion yuan in April (revised from -200 billion yuan). Consensus estimates suggested a reduction of 50 billion yuan.
The PBoC said that in May, M2, the widest measure of money supply, rose by 7.0% per year after an increase of 7.2% per annum in April. Economists had expected growth of 7.5%. Outstanding loans in yuan rose by 9.3% per year, slowing compared to April (+9.6%), but confirming economists' forecasts.
According to the results of the latest Reuters poll, market watchers predict that next week the Central Bank of China will leave the interest rate on the one-year medium-term lending facility (MLF) loan unchanged at 2.50%. The MLF rate serves as a guide to the LPRs and markets mostly use it as a precursor to any changes to the lending benchmarks. Overall, deteriorating interest margins and a weaker national currency continue to hamper the authorities' efforts to ease monetary policy to support the economy.