S.Korea's money supply grows fast after policy rate cut

Source: Xinhua| 2019-12-11 13:19:15|Editor: zh
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SEOUL, Dec. 11 (Xinhua) -- Money supply in South Korea grew fast in October after the policy rate cut to a record low, central bank data showed Wednesday.

The M2, called broad money, expanded 7.5 percent in October from a year earlier, after growing 7.6 percent in the previous month, according to the Bank of Korea (BOK).

The September growth was the fastest increase in three and a half years since March 2016.

The fast increase came after the BOK slashed its benchmark interest rate from 1.50 percent to a record low of 1.25 percent in October. The central bank lowered the target rate by 25 basis points in July.

The M1, dubbed narrow money, was up 5.3 percent in October after rising 5.0 percent in September.

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 8.3 percent in the cited period. The year-over-year increase of liquidity aggregate, the broadest measure of money supply, was 7.4 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.