BEIJING (Reuters) – China's central bank said it is likely to cut interest rates from the current level of 1.5% “in due course” by 2025, the Financial Times reported on Friday citing comments the bank made to the newspaper.
The People's Bank of China said it would prioritize “the role of interest rate adjustment” and move away from “quantitative targets” for loan growth, as it embarks on an interest rate adjustment process that government advisers have called a “difficult task.”
China's main benchmark is the seven-day reverse repo rate, which was last lowered from 1.7% to 1.5% in late September.
During a high-level economic agenda meeting in December, China's top leaders vowed to cut interest rates “at the right time” and reduce the number of big banks they must maintain, as part of a broader effort to encourage lending and investment. in an ailing economy.
The country's top policymakers also pledged at the Economic and Labor Conference to increase the budget deficit and loosen monetary policy, as the world's second largest economy prepares for trade tensions with the United States as Donald Trump returns to the White House.
China's economy has shown an over-reliance on manufacturing and exports over the past year, with domestic demand disappointing as a strong property market drains consumer wealth and most government stimulus goes to manufacturers and infrastructure.
Government advisers recommended that Beijing keep its growth targets unchanged this year, but also called for stronger fiscal stimulus to support subdued domestic demand.
Chinese President Xi Jinping said on Tuesday that China's 2024 gross domestic product is expected to exceed 130 trillion yuan ($17.81 trillion), and added that policymakers will use effective policies to promote growth. in 2025.
($1 = 7.2994 renminbi)