FX.co ★ PBOC to Lower Sector-Specific Rates

On Thursday, China's central bank revealed plans to cut interest rates for specific sectors, aiming to stimulate early economic growth. This announcement also indicated potential for additional rate decreases this year, including reductions in banks' cash reserve requirements and wider rate cuts, as per a report by Reuters. Deputy Governor Zou Lan of the People’s Bank of China (PBOC) conveyed the decision to lower interest rates on structural monetary policy instruments by 25 basis points, effective January 19. This type of rate cut historically has a more modest impact on economic growth than adjustments to the benchmark policy rates. Specifically, the one-year relending rate will decrease from 1.5% to 1.25%, accompanied by proportional changes to rates for other terms. Structural monetary policy instruments are tools deployed by central banks to address specific sectors or segments of the economy, such as aiding small businesses, fostering technological innovation, and supporting green development initiatives. According to central bank data, loans outstanding under these structural tools amounted to CNY 5.9 trillion ($846.84 billion) as of the end of March 2025.