Money supply growth is running out of steam, says central bank

GEOPOLITICAL TENSIONS:
Global financial markets would remain volatile as the Russia-Ukraine conflict unfolds, the bank said, ahead of its policy review

  • By Crystal Hsu / Staff Reporter

The pace of M1B and M2 money supply growth lost some momentum in January as investors grew cautious amid local COVID-19 infections and unease over monetary tightening from global policymakers, a report said. the central bank said Thursday.

The narrower gauge of M1B, which refers to cash and cash equivalents, rose 11.29% from a year earlier.

The pace of increase slowed from December and previous months as government agencies and private firms reduced demand deposits ahead of the Lunar New Year holiday, the central bank said, adding that this will not Wasn’t unusual at this time of year.

Photo: ANC

The latest data still suggests ample liquidity to support economic activity and capital markets, the central bank said, as stock analysts often use M1B readings to calculate equity investment interest.

The broader measure of M2 – time deposits, time savings deposits, foreign exchange deposits, mutual funds and M1B – rose 7.87% in January, weaker than the recovery of 8.72 % for the whole of last year, the central bank said.

Capital momentum is not an issue with the local stock exchange, as securities accounts had a balance of NT$3.14 trillion ($112 billion), although the figure fell from NT$32 billion. compared to the previous month, he said.

The pullback was due to overseas portfolio managers who cut positions ahead of the week-long Lunar New Year holiday and transferred cash dividends distributed by Taiwan Semiconductor Manufacturing Co (台積電) overseas.

Financial markets around the world would remain volatile as the Russian invasion of Ukraine unfolds, the central bank said.

Global capital would not sit idle as the US Federal Reserve is expected to raise interest rates this month when its Federal Open Market Committee meets on March 15-16, he said.

Taiwan’s central bank is due to review its monetary policy on March 17.

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