People's Bank of China cuts structural policy tool rates by 0.25 percentage points

The People's Bank of China lowered interest rates on structural monetary policy tools by 0.25 percentage points, reducing the one-year relending rate to 1.25% with other maturities adjusted accordingly, Deputy Governor Zou Lan said at a State Council Information Office briefing on January 15. Zou said the central bank aims to refine these structural instruments and increase support to facilitate economic restructuring. He added room remains for further cuts to the reserve requirement ratio and policy rates, noting the average required reserve ratio for financial institutions stands at 6.3%, the renminbi exchange rate remains relatively stable while the U.S. dollar is in a rate-cut cycle, and that recent reductions in structural policy tool rates will help lower banks' interest expenses, stabilize net interest margins and create space for potential rate cuts as sizeable 3-year and 5-year term deposits mature in 2026.