S.Korea's money supply keeps growing on near-record-low interest rate

Source: Xinhua| 2019-08-13 12:38:53|Editor: ZD
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SEOUL, Aug. 13 (Xinhua) -- Money supply in South Korea kept growing in June on the near-record-low interest rate, central bank data showed Tuesday.

The M2, called broad money, gained 6.7 percent in June from a year earlier, after rising 6.6 percent in the previous month, according to the Bank of Korea (BOK).

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 lifted its target rate by 25 basis points to 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 bank eventually lowered the policy rate by a quarter percentage point again to 1.50 percent in July.

The M1, dubbed narrow money, was up 3.3 percent in June 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 8.0 percent in the cited period. The year-over-year increase of liquidity aggregate, the broadest measure of money supply, was 7.1 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.