The moves signal targeted adjustments to bolster an economy hit by weak demand and imbalances
[BEIJING] China’s central bank will lower interest rates on its structural monetary policy tools by 0.25 percentage points, stepping up targeted support for the economy as it enters 2026.
Deputy governor Zou Lan announced on Thursday (Jan 15) during a briefing in Beijing that the one-year rate for various relending facilities will be reduced to 1.25 per cent from 1.5 per cent. The instruments are meant to encourage banks to lend to companies in various sectors.
The People’s Bank of China (PBOC) will also establish a dedicated relending programme for private companies and increase quotas for tech innovation loans.
The moves signal a commitment to more targeted adjustment to bolster an economy hampered by weak demand and deep-seated imbalances. Zou also said that banks’ improved interest margins create space for reducing the policy interest rate, without specifying a timeframe.
The PBOC delivered just one 10-basis-point reduction to the policy interest rate in 2025 – far less than the 40 to 60 basis points of easing many had expected.
To further support credit, the PBOC will provide an additional 500 billion yuan for lending towards small businesses and the agricultural sector by merging and expanding existing facilities.
Zou also noted that the PBOC plans to gradually increase the trading of government bonds in open market operations to maintain ample liquidity.
The monetary authority will release documents outlining the specific policy implementations shortly, Zou said. BLOOMBERG
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