China Signals Interest Rate Reduction This Year

2025-01-03 02:05 By Chusnul Chotimah 1 min. read

The People's Bank of China (PBoC) indicated the possibility of reducing interest rates from the current 1.5% "at an appropriate time" this year, according to a report by Reuters, citing the Financial Times.

The remarks were consistent with the Chinese Politburo's December decision to shift the country's monetary policy stance from 'prudent' to 'appropriately loose', the first such shift in 14 years, aimed at bolstering the sluggish economy.

Meanwhile, a PBoC official, Wang Xin, suggested that policymakers might further lower borrowing costs and the reserve requirement ratio for commercial banks in 2025.

The central bank also highlighted that its interest rate reform program would prioritize 'interest rate adjustments' over 'quantitative objectives' for loan growth.

This modification underscores a broader commitment to developing a more market-oriented interest rate framework, as policymakers aim to revamp the monetary policy structure to align more closely with global standards.



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