S. Korea's money supply growth stays high on record-low policy rate

Money supply in South Korea increased more than eight percent in March, keeping a high upward trend amid the record-low interest rate, central bank data showed Thursday.

The country's M2, or broad money, expanded 8.3 percent in March from a year earlier, according to the Bank of Korea (BOK).

The broad money growth temporarily fell from 8.3 percent in November last year to 8.1 percent in December and 8.0 percent in January and February each, before rebounding to 8.3 percent in March.

The higher expansion came as the BOK cut its benchmark interest rate to an all-time low of 1.75 percent in March after lowering by a quarter percentage point in August and October last year to two percent.

The M1, dubbed as narrow money, surged 15.5 percent in March from a year earlier.

The M1 covers currency in circulation, demand deposit and transferable savings deposit equivalent to cash. The M2 adds money market fund, money trust, time deposit and financial products that mature in less than two years to M1.

Liquidity of financial institutions, called Lf, climbed 9.3 percent in March from a year earlier. The on-year growth of liquidity aggregate, the broadest measure of money supply, was nine percent in March.

The Lf includes financial products with a maturity of more than two years and liquidity at insurers and brokerages along with M2, while the liquidity aggregate adds state and corporate bonds to the Lf. Endi