US Core PCE YoY Growth Rises for Third Consecutive Time to 3.1%; Sticky Inflation Dents Short-Term Rate Cut Expectations

China's Outstanding Bank Loan YoY Growth Drops to Record Low of 6.0% in February 2026, Real Economy Credit Demand Remains Weak

According to the latest data, the year-on-year growth rate of China's total loans by financial institutions was 6.0% in February 2026, further sliding from 6.1% in the previous month and hitting a new record low. The latest single-month new yuan loans only reached 900 billion yuan, significantly lower than the market estimate of 979 billion yuan, and drastically contracted compared to 4.71 trillion yuan in January. The increment in aggregate financing to the real economy also showed a slowdown, highlighting that despite the authorities repeatedly emphasizing stable growth, the credit demand of the real economy still faces severe challenges. Breaking down the latest credit structure, household loans experienced a massive contraction of about 650.7 billion yuan in February. Compared to the positive growth in January, this indicates that residents continue to hold back on mortgages and consumer loans. Meanwhile, new corporate loans in February were about 1.49 trillion yuan, also dropping significantly from 4.45 trillion yuan in January. This phenomenon is not only affected by the seasonal impact of reduced working days during the February Lunar New Year holiday but also reflects that after banks' "jump-start" front-loading of loans in January, the subsequent willingness for corporate capital expenditure remains weak. Addressing the frequent record lows in loan growth, analyses from institutions such as Reuters and Capital Economics point out that the core driving factors lie in the prolonged downturn of the real estate market and the collapse of private consumption confidence. Due to damaged household balance sheets, people tend to repay loans early or postpone home purchases, leading to a net decrease in retail credit. Furthermore, enterprises remain cautious about future profit prospects, causing most borrowed funds to flow into government-promoted infrastructure or debt swaps of state-owned enterprises, failing to effectively translate into a driving force for private investment. Looking ahead, in the short term (1-2 months), as the Spring Festival holiday ends and enterprises resume work, credit demand is expected to show a marginal recovery, but the overall momentum is still constrained by the pace of real estate destocking. Investors need to guard against the risk of credit data falling below expectations again. In the medium term (3-6 months), facing the diminishing transmission efficiency of monetary policy, institutions like Guotai Junan expect that although the PBOC may maintain moderate easing and utilize reserve requirement ratio (RRR) cuts, the policy focus will shift to the fiscal side, such as promoting 300 billion yuan in special sovereign bonds and "trade-in" subsidies for consumer goods, to substantively boost domestic demand. Web search reference sources: https://tradingeconomics.com/china/new-bank-loans/news/525666 https://www.marketscreener.com/news/china-february-new-loans-slump-more-than-expected-as-weak-demand-persists-ce7e5fd2d18cf52c https://www.morningstar.com/news/dow-jones/202603132713/china-new-yuan-loans-plunged-in-february