Friday, September 11, 2009

"Moderately Loose"?

The good news from the Chinese economy today was that industrial production and retail sales increased at its fastest rate this year.

The bad news was that this was partly caused by very high money supply growth. While China with its higher structural growth rate has room for higher money supply growth than other countries, the current 28.5% increase in M2 is clearly excessive even for China. I BTW found this paragraph in the Bloomberg news story about it remarkable:

"People’s Bank of China figures showed today that M2, the broadest measure of money supply, rose by a record 28.53 percent, as the central bank maintained a “moderately loose” policy stance."

28.5% M2 growth is "moderately" loose? I'd hate to see an extremely loose policy stance then.....


Post a Comment

<< Home