RMB Loan Increased in November may impact on RRR

November financial statistical data released by People's Bank of China recently shows money supply growth rate has hit a record low. RMB562.2 billion loan increased and deposit growth remains weak in November.

At the end of November, broad money balance growth rate was 12.7% and narrow money balance growth rate was 7.8% year on year. Net cash injection was 73.8 billion with 13.3 billion more year on year. RMB562.2 billion loan increased with 7.8 billion more year on year.

If we analyse it on department base, resident loan increased by 142.5 billion, non-financial enterprise and other department loan increased by 418.3 billion. In the same month, RMB deposit has an increase of 324.7 billion with 262.6 billion less year on year. Wherein, resident deposit increased by 210.3 billion, non-financial enterprise deposit increased by 373.1 billion and public finance-cash in bank decreased by 376.3 billion.

Mr Peng Wensheng, Chief economist of CICC, predicted the central bank would enhance monetary policy presetting and fine-tuning force, and continue down regulating Reserve Requirement Ratios (RRR) while strengthen open market operations and initiative injection. The next adjustment on RRR would be January 2012.

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