BEIJING - China's commercial banks pursued more aggressive lending in August than in July due to a temporary ease in inflation in August, as indicated by data released by the country's central bank on Sunday.

New lending in August was 55.9 billion yuan ($8.75 billion) higher than new loans in July.

New yuan-denominated loans reached 548.5 billion yuan in August, up 9.3 billion yuan year-on-year, the People's Bank of China (PBOC), the country's central bank, said in a statement on its website on Sunday.

By the end of August, the outstanding broad money supply (M2), which covers cash in circulation and all deposits, rose 13.5 percent year-on-year to 78.07 trillion yuan, down 1.2 percentage points from July growth and down 5.7 percentage points from the same period last year, according to the statement.

The M2 growth in the first eight months fell below the target of 16 percent set by the PBOC at the beginning of this year.

The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, increased 11.2 percent year-on-year to 27.33 trillion yuan, down 0.4 percentage points from July and down 10.7 percentage points from August last year.

The continued slowdown in both M1 and M2 growth was a collective result of the central bank's monetary tightening measures in recent months amid rising inflation, said Zhu Jianfang, chief economist of Citic Securities.

Zhu believes the PBOC will be wary of any plans to introduce new tightening measures in the coming months, given economic uncertainty in the United States and the European Union.

"The monetary policy will be steady and the likelihood for an interest rate hike within this year is diminishing," he added.

"The new loans in August were basically in line with my expectation of 550 billion yuan," said Zhao Qingming, a senior researcher with China Construction Bank, one of the country's largest lenders.

Zhao said lending growth was recovering during August because the central bank noted that medium and small-sized enterprises had difficulty accessing loans and, thus, lessened its liquidity tightening efforts in the markets.

The accelerated construction of government subsidized housing units also helped boost the lending increment in August, Zhao said.

According to the PBOC statement, new yuan-denominated deposits dropped 373.6 billion yuan from August last year to reach 696.2 billion yuan in August.

By the end of August, outstanding yuan-denominated deposits totaled 78.67 trillion yuan, up 15.5 percent year-on-year. The August growth rate was down 0.8 percentage points from July and 4.1 percentage points year-on-year.

Li Zhiqiang, an economist with China Minsheng Banking Corp Ltd, said he is not optimistic about possible policy loosening in the coming months due to lingering inflationary pressure.

China's consumer price index (CPI), a main gauge of inflation, rose 6.2 percent year-on-year in August, down from a 37-month high of 6.5 percent in July, according to data released by the National Bureau of Statistics last Friday.

"On a month-on-month basis, the CPI increased 0.3 percent from July, meaning inflationary pressure remains huge. So it is not possible for policymakers to treat it lightly," Li said.

Meanwhile, outstanding foreign currencies-denominated deposits stood at $256.1 billion, up 14.5 percent year-on-year.