Private sector credit growth accelerated to +4.6% y/y in January 2025 from +3.8% y/y in December 2024.

The improvement in the latest reading was due to higher growth in corporate credit demand (+6.10% y/y in January from +4.6% y/y in December). Conversely, household credit growth slowed for a fourth consecutive month in January to +2.9% y/y (+3.0% y/y in December).

Along with an uptick in credit demand, M3 money supply accelerated to +7.1% in January y/y from +6.7% y/y in December.

The latest improvement in private sector credit demand is welcome, likely supported by slightly lower interest rates. However, the print is unlikely to signal the start of a strong credit cycle surge, given the reality of tight lending standards and low economic growth. These factors are weighing on the private sector’s appetite for taking on more debt despite the rate-cutting cycle.