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S.Korea's money supply keeps rising in December on low policy rate

Money supply in South Korea kept rising in December on the still low policy rate, central bank data showed on Thursday.

The M2, called broad money, grew 6.8 percent in December from a year earlier, after rising by the identical rate in November, according to the Bank of Korea (BOK).

The expansion came as the central bank maintained its low policy rate for a prolonged period of time.

The BOK hiked its benchmark interest rate by a quarter percentage point in November last year to 1.75 percent.

It was the first rate hike in 12 months, but the rate was far lower than the U.S. target rate ranging from 2.25 percent to 2.50 percent.

The M1, dubbed narrow money, added 1.9 percent in December from a year ago.

The M1 refers to the currency in circulation, demand deposits, transferable savings deposits equivalent to cash. The M2 adds money market funds, time deposits and financial products that mature in less than two years to M1.

The liquidity of financial institutions, called the Lf, expanded 7.6 percent in the cited period. The year-over-year increase of liquidity aggregate, the broadest measure of money supply, was 6.1 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.

(www.chinaview.cn 2019-02-15)