Credit growth slows, but is better than expected
Money supply growth accelerated very slightly, while credit extended to consumers and business grew significantly faster than forecasts
Growth in credit granted to the private sector slowed in September, but was still better than the market expected.
Private sector credit extension (PSCE) grew at an annual rate of 6.26% in September, a slowdown from August’s 6.74%, Reserve Bank data showed on Monday.
A poll of economists by Trading Economics had expected PSCE growth of 6% while the market consensus put the figure at 5.5%.
Investec economist Lora Hodes said on Friday, before the release of the data, that weak economic data and depressed consumer confidence would weigh on credit growth.
M3 money supply, the Bank’s broadest measure of how much money is circulating in the economy, grew 7% year on year in September, from 6.95% in August.
When money supply increases, it typically increases the availability of loans. The higher the money supply growth, the higher the growth in available funds.