New bank loans in China rose less than expected in May, totaling 620 billion yuan

  • missing forecasts of 850 billion despite recent rate cuts and a temporary U.S.-China trade truce

  • This follows a nine-month low in April

Year-on-year loan growth slowed to a record low of 7.1%, down from 7.2% in April.

  • Household loans (mostly mortgages) grew slightly in May (+54bn) after a sharp contraction in April, but corporate loan demand weakened.

  • Broad M2 money supply rose 7.9% y/y, also below expectations of 8.1%, and down from April’s 8.0%.

  • Total social financing (TSF) growth remained steady at 8.7%, supported by increased government bond issuance.

Analysts cited persistent deflation pressures and elevated real borrowing costs as key factors dampening private credit demand, despite modest central bank easing:

  • Reuters cite Capital Economics expecting further rate cuts of up to 40 basis points later this year to support growth.

Earlier:

PBOC
Source: Forex Live