Cheng Shi, Chief Economist and Managing Director of ICBC International, talks about changes in monetary aggregates and residents’ deposits

When inflation continues to rise, the central bank can only raise interest rates. Higher interest rates will reduce residents' borrowing and consumption, thereby reducing economic activity. This may lead to a decline in residents' income, thereby further suppressing residents' deposits. These two theories are...

Factors affecting residents’ deposits

Resident deposits are affected by many factors, including inflation rate, central bank interest rate policy, residents' income level, etc. Rising inflation will reduce residents' purchasing power, making them inclined to increase their savings to cope with future uncertainties.

central bank interest rate policy

The central bank usually controls the inflation rate by adjusting interest rate policies. Raising interest rates will increase residents' borrowing costs, thereby reducing borrowing and consumption behaviors, causing residents to tend to increase deposits.

residents’ income level

The income level of residents directly affects their ability to save. Residents with higher income levels are more likely to have more savings, while residents with lower income levels may find it more difficult to have excess funds for deposits.

• inflation rate
• central bank interest rate policy
• residents’ income level

In general, residents' deposits are affected by many factors, including the economic environment, policy regulation, etc. Only when the economy is stable and residents' income increases can residents' deposits maintain steady growth.