Industry insiders: M2 should be used as an observational indicator

The People's Bank of China released financial data for April today. As of the end of April 2025, the balance of broad money (M2) was 325.17 trillion yuan, an increase of 8% year-on-year. "In the long run, the growth rate of M2 should be used as an observational indicator." Industry insiders stressed that in the long run, the growth rate of broad money M2 in our country has generally remained above 7%, which continues to be higher than the nominal economic growth rate. But in the short term, the growth rate of M2 will also be affected by factors such as market operation and the behavior of economic entities, and there will be certain temporary fluctuations. Industry experts say that using M2 growth as an observational indicator of monetary policy is inherently reasonable. With the deepening of finance and the transformation of economic structure, market research shows that the correlation between monetary aggregates and economic growth is weakening, and major developed economies have also experienced a process of gradually diluting and abandoning the peg to aggregate indicators. (Financial Times)