China’s bank lending contracted by a record RMB 340 billion (approximately $50.4 billion) in July as household and corporate borrowing declined. US inflation eased, while Japan’s economic growth slowed as consumption stalled.

Financing initiatives extended from consumer credit to strategic infrastructure. Bank of America agreed to invest up to $1.9 billion for as much as 49.9% of Jio Credit. It also launched a US infrastructure-finance initiative, while Morgan Stanley set a longer-term infrastructure target and NVIDIA enlisted six investment groups to finance AI computing capacity.

Read more on the week’s key developments:

1. China records largest monthly contraction in bank lending

People’s Bank of China data released on 14 August showed that new renminbi bank lending contracted by a record RMB 340 billion ($50.4 billion) in July, compared with an increase of RMB 1.61 trillion ($238.7 billion) in June. Household loans fell by RMB 460.3 billion ($68.2 billion) and corporate loans by RMB 130 billion ($19.3 billion), with lending to non-bank financial institutions and movements in other categories partly offsetting these declines. New loans totalled RMB 10.38 trillion ($1.54 trillion) in the first seven months of 2026, down from RMB 12.87 trillion ($1.91 trillion) a year earlier.

July is typically a weaker month following quarter-end lending in June, but the contraction was substantially below economists’ expectations for a modest increase. The PBOC has encouraged greater use of total social financing, which includes bonds and equity financing, when assessing credit conditions. Growth in total social financing remained at 7.4% year-on-year in July, while M2 growth slowed to 7.7%.

2. US inflation eases to 3.4% in July

Data released by the Bureau of Labor Statistics on 12 August showed that US consumer prices rose 0.1% month-on-month in July, while annual inflation eased from 3.5% to 3.4%. Core prices increased 0.2% during the month, but annual core inflation declined from 2.6% to 2.5%. Energy prices fell 1.5%, while shelter costs rose 0.1% and accounted for around two-thirds of the monthly increase. Price pressures remained uneven, with energy costs still 14.7% higher than a year earlier and food prices up 3%.

Goldman Sachs described the report as broadly in line with expectations but said it pointed to slightly softer core personal consumption expenditure inflation, the Federal Reserve’s preferred measure. Following the release, federal funds futures put the probability of rates remaining unchanged in September at around 62%, up from about 50% the previous day.

3. Japan’s GDP growth slows to 0.3% as consumption stalls

Preliminary Cabinet Office data released on 17 August showed that Japan’s economy expanded 0.3% quarter-on-quarter in the second quarter, below the 0.5% market forecast but marking a third consecutive quarter of growth. Private consumption was unchanged and business investment fell 1.2%, while net exports contributed 0.5 percentage points to growth.

The GDP figures contrasted with continued strength at Japan’s largest banks. MUFG and SMFG reported fiscal first-quarter profit increases of 48% and 33%, respectively, supported by continued corporate loan demand and domestic loan-deposit spreads that widened by 20 and 23 basis points year-on-year. MUFG cited borrowing for capital expenditure, domestic and overseas investment and acquisitions. The consumption and investment figures will form part of the Bank of Japan’s assessment before its September policy meeting.

4. Jio Financial brings Bank of America into Indian consumer-credit venture

On 12 August, Bank of America agreed to invest up to INR 182.68 billion ($1.9 billion) for as much as 49.9% of Jio Credit, the non-bank lending subsidiary of Jio Financial Services. The initial share allotment will give Bank of America a 26.5% interest, which can increase through the exercise of warrants. Jio Credit has built more than $3 billion in assets under management over two years and offers mortgages, loans against securities, commercial credit and supply-chain finance.

The transaction brings Bank of America into Indian lending through a locally controlled non-bank joint venture, giving it access to Jio Financial’s distribution while Jio retains majority ownership. Unlike Citi, which sold its Indian consumer business to Axis Bank in 2023, Bank of America is entering consumer finance without building a standalone retail-banking network. The structure follows other recent foreign investments in Indian financial institutions, including SMBC’s investment in Yes Bank, MUFG’s investment in Shriram Finance and Emirates NBD’s investment in RBL Bank.

5. NVIDIA brings six investment groups into AI infrastructure expansion

On 10 August, NVIDIA signed memorandums of understanding with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to establish independent compute-financing platforms. The partnerships target more than $500 billion of third-party capital for AI infrastructure over time, although final agreements, individual allocations and a deployment schedule have not been disclosed.

The initiative extends NVIDIA’s role beyond supplying chips and computing systems to helping customers obtain infrastructure financing. It would connect computing suppliers and data-centre developers with institutional capital through platforms managed independently by the six investment groups. The $500 billion remains a mobilisation target under preliminary agreements, not committed capital from NVIDIA or the investment groups.

6. Bank of America and Morgan Stanley set major US infrastructure targets

Bank of America on 12 August launched an 18-month Critical Infrastructure Finance Initiative covering $250 billion of eligible activity across US digital, energy and core infrastructure. Morgan Stanley had announced its US Innovation Infrastructure Initiative on 10 August, targeting approximately $1.5 trillion in capital raising, financing, advisory and related investment activity over ten years.

The initiatives follow JPMorganChase’s $1.5 trillion, ten-year Security and Resiliency Initiative launched in October 2025. Rising investment in data centres is increasing demand for lending, underwriting and advisory services across digital and energy infrastructure. However, the banks’ targets cover several forms of financing and advisory activity and do not represent committed lending.

7. Brazilian banks tighten risk appetite in consumer lending

Brazilian banks’ latest results commentary detailed reductions in higher-risk and unsecured consumer lending. Santander Brasil said it had reduced exposure to customers earning below BRL 4,000 ($771) per month. Bradesco said its appetite for lower-income customers was substantially lower than in the past and that a larger share of its portfolio was backed by collateral.

The banks made these comments during their results discussions as borrowing costs and delinquencies remained elevated. Brazil’s central bank lowered the Selic rate for a fourth consecutive meeting in August, but the benchmark rate remains at 14%. Central-bank data put household liabilities at 49.8% of accumulated disposable income in May, while defaults on non-earmarked household and corporate credit reached a record 6.2% in June.

8. Indonesia nominates Destry Damayanti to lead central bank

On 10 August, Indonesian President Prabowo Subianto nominated acting governor Destry Damayanti as the sole candidate to lead Bank Indonesia following Perry Warjiyo’s resignation. Damayanti has served as senior deputy governor since 2019 and must complete a parliamentary fit-and-proper assessment before appointment. She would become Bank Indonesia’s first permanent female governor.

The nomination retains an existing member of Bank Indonesia’s leadership after Warjiyo’s departure unsettled financial markets. Damayanti would take office as the government targets 6% growth and 2.5% inflation under its proposed 2027 budget, which assumes inflation of 2.5% and an exchange rate of IDR 17,500 per dollar. Parliament has up to one month to consider her nomination.

9. RBI closes overseas-deposit swap window early after $52.3 billion inflow

On 14 August, the Reserve Bank of India announced that it would close its concessional foreign-exchange swap facility for Foreign Currency Non-Resident Bank deposits on 31 August, one month earlier than planned. Indian banks had mobilised $52.3 billion through the facility by 13 August, accounting for most of the $56.85 billion attracted under three foreign-currency schemes introduced in June.

The facility allowed banks to raise fresh foreign-currency deposits with original maturities of three to five years and swap the principal with the RBI at a concessional rate, reducing their currency-hedging costs. Banks may complete swaps on eligible deposits until 11 September, while separate facilities covering external commercial borrowings and overseas foreign-currency borrowings will remain open until 31 December.

10. Argentina widens dollar lending to companies earning pesos

On 13 August, Argentina’s central bank announced that banks would be allowed to lend as much as 15% of their dollar deposits to companies that generate revenue in pesos. Dollar credit had largely been restricted to exporters and companies supported by foreign-currency income. The new allocation currently represents approximately $5.8 billion of potential lending, according to Economy Minister Luis Caputo.

The previous restrictions were introduced after Argentina’s 2001 crisis, when borrowers earning pesos were unable to service dollar debts following devaluation. The 15% ceiling retains a limit on the resulting currency mismatch while giving banks a wider set of borrowers for their dollar deposits. Credit performance will depend partly on how banks assess borrowers without natural dollar revenue.

What to watch

Bank Indonesia policy decision and FOMC minutes (19 August), China loan prime rates (20 August), Bank of Thailand policy decision (26 August), ECB monetary-policy accounts and Bangko Sentral ng Pilipinas policy decision (27 August), Jackson Hole Economic Policy Symposium (27–29 August), G20 finance ministers and central-bank governors meeting (29–30 August)