New bank loans reached a new high in January as the central bank attempted to bolster the economy, fuelling forecasts for additional stimulus over the next few months.

Due to the country's property crisis and ongoing stock market rout, policymakers pledged to implement further measures to boost the economy's post-pandemic recovery.

Last month, banks extended 4.92 trillion Yuan ($683.7 billion) in new Yuan loans, an all-time high exceeding analysts' forecasts, according to the latest data from the People's Bank of China (PBOC).

Lending in January was more than four times that of December's 1.17 trillion and surpassed the prior high of 4.9 trillion Yuan in January 2023, Reuters reports.

Indeed, analysts surveyed by Reuters predicted new Yuan loans would increase to 4.50 trillion Yuan in January.

"January bank lending is stronger than expected, which will support the real economy," stated Luo Yunfeng, an economist at Huajin Securities.

"Going forward, monetary policy is likely to be loosened marginally."

Furthermore, in 2023, Chinese banks issued an all-time high of 22.75 trillion Yuan in new loans, a 6.8% increase from 2022. However, year-on-year loan growth declined to over a two-decade low in December due to the weak economic outlook.

China's economy grew 5.2% last year, and although it reached the official target, the recovery was far more vulnerable than investors and analysts had forecast.

Last week, the People's Bank of China announced policy would remain flexible and precise to boost domestic demand, whilst price stability would be maintained amid ongoing deflationary risks.

"In light of deepened deflation and downbeat sentiment, we continue to expect two more policy rate cuts and two more RRR cuts through the remainder of this year," stated Goldman Sachs analysts.

To boost growth, the central bank slashed the reserve requirement ratio for banks by 50 basis points earlier this month, the largest cut in two years, releasing 1 trillion Yuan in long-term liquidity.