Money supply rises 14.8%, lending up 16.3%

China's broad M2 money supply rose 14.8 percent in September from a year earlier, beating market expectations for a 13.7 percent rise, as policymakers keep credit growth healthy to help counter the effects of a slowing economy.

The country's outstanding yuan loans in September rose by 16.3 percent from a year earlier, the People's Bank of China, the central bank, said Saturday in a statement on its website www.pbc.gov.cn.

"M2 growth is stronger than expected and it shows liquidity conditions are generally okay," said Zhu Jianfang, chief economist at CITIC Securities.

"On the policy front, we don't expect the central bank to cut interest rates," he said.

The central bank could rely on reverse repos to inject liquidity into money markets for a while, Zhu noted.

China's monetary authorities have made more frequent use of money market operations of late to keep liquidity flowing through the banking system, rather than adjusting required reserve ratios also known as RRR, or interest rates.

Many analysts expect that to continue while lending remains relatively robust without any cut to the proportion of deposits that banks keep as deposits which would free up cash for loans.

Chinese banks made 623.2 billion yuan ($99.28 billion) of new local currency loans in September, data showed Friday, a touch below market expectations for 650 billion yuan, though still leaving the aggregate level on course to hit more than 8.5 trillion yuan in 2012.

That is expansionary versus the 7.5 trillion of new loans extended in 2011 and above the 8 trillion yuan that sources told Reuters back in February was the target for 2012.