S.Korea's money supply continues to grow on near-record-low interest rate

Source: Xinhua| 2019-07-11 12:12:02|Editor: Xiang Bo
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SEOUL, July 11 (Xinhua) -- Money supply in South Korea continued to grow in May on the near-record-low interest rate, central bank data showed Thursday.

The M2, called broad money, gained 6.6 percent in May from a year earlier, after rising by an identical figure in the prior month, according to the Bank of Korea (BOK). From a month ago, the seasonally-adjusted M2 grew 0.4 percent.

The continued growth came as the BOK left its benchmark interest rate unchanged at a near-record-low level for a protracted period of time.

The BOK raised its policy rate by 25 basis points to the current 1.75 percent in November last year, after hiking it to 1.50 percent from an all-time low of 1.25 percent in the same month a year earlier.

The M1, dubbed narrow money, was up 3.2 percent in May from a year earlier.

The M1 refers to the currency in circulation, demand deposit, transferable savings deposit equivalent to cash. The M2 adds money market fund, time deposit and financial products that mature in less than two years to M1.

The liquidity of financial institutions, called Lf, expanded 7.9 percent in the cited period. The year-over-year increase of liquidity aggregate, the broadest measure of money supply, was 6.5 percent.

The Lf includes financial products with a maturity of more than two years and liquidity at insurers and brokerages along with M2. The liquidity aggregate adds state and corporate bonds to the Lf.