China’s bank lending fell more than anticipated in July, reaching its lowest point in almost 15 years. Seasonal factors and a lacklustre credit demand contributed to the decline, which raised hopes that the central bank would implement additional easing measures. According to data released by the People’s Bank of China on Tuesday, Chinese banks extended 260 billion yuan ($36.28 billion) in new yuan loans in July, down nearly 88% from the previous month and missing analysts’ forecasts.
July is typically a slow month for credit expansion, so analysts surveyed by Reuters estimated that new yuan loans would total 450 billion yuan last month.
Following the data, a few analysts said they anticipated more interest rate cuts from the PBOC, but they may have to proceed cautiously to avoid escalating capital flight and depreciating the value of the yuan.
The credit data for July is in fact extremely shaky, according to Zhou Shilei, head of UOB’s global financial markets division (China). “There are expectations for additional rate cuts, and the impact of previous interest rate reductions is not significant.” The amount of new yuan loans last month was less than 345.9 billion yuan a year ago and was down from June’s 2.13 trillion yuan.
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