The People's Bank of China (PBoC) plans to cut interest rates in 2025 as part of a historic shift towards a more orthodox monetary policy, aligning it more closely with the US Federal Reserve and the European Central Bank. The PBoC intends to prioritize interest rate adjustments, moving away from quantitative objectives for loan growth. This change signifies a transformation of Chinese monetary policy, emphasizing the benchmark interest rate as the primary tool for influencing credit demand and economic activity.
The People’s Bank of China plans to cut interest rates this year as it makes a historic shift to a more orthodox monetary policy to bring it closer into line with the US Federal Reserve and the European Central Bank. In comments to the Financial Times, the Chinese central bank said it was likely it would cut interest rates from the current level of 1.5 per cent “at an appropriate time” in 2025.
” As part of the change in regime, the PBoC clarified last year that its main policy instrument would be the seven-day reverse repo rate rather than the host of interest rates it has relied on to date. A reduced emphasis on targets for credit growth could rein in the rampant overcapacity in China that has led to bad debts at home and disruption to global industries such as steel.
Monetary Policy Interest Rates Pboc China Economic Development
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