Credit growth slowed last month, a sign that the cash crunch delivered some of what policymakers were hoping for. But credit is still expanding more than twice as fast as economic output, which means that a further slowdown will be needed to bring credit risks under control. Meanwhile, interbank rates have fallen sharply since late June. A key challenge for policymakers in the next few months will be to rein in credit without resorting to further destabilising shocks to the financial system.
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