MNI BRIEF: PBOC To Make Timely RRR, Rate Cuts - Xuan

The People’s Bank of China has ample policy space and will cut the reserve requirement ratio (RRR) and interest rates in a timely manner, depending on domestic and international economic, and financial conditions and market performance, said Deputy Governor Xuan Changneng on Thursday at the Boao Forum For Asia Annual Conference 2025. 

Against a backdrop of heightened uncertainty, China’s monetary policy framework has maintained a clear focus on moderate easing, and the Bank will employ tools to maintain ample market liquidity, strengthen the implementation and oversight of interest rate policies, and persistently reduce overall financing costs across the economy, he said. 

The Bank will focus on the introduction of a tech platform for the bond market to channel low-cost funding directly into the technology sector, and expand the scale and coverage of re-lending facilities for technological innovation, with reduced interest rates and streamlined approval procedures, he noted. (See MNI INTERVIEW: PBOC To Spur Tech Firm Bond Issuance)

The central bank has pursued an accommodative approach to aggregate liquidity, with broad money (M2) and aggregate social financing growth consistently outpacing nominal GDP growth. Notably, the M2-to-GDP ratio now exceeds 2 times, while the macro leverage ratio has surpassed 300%, with both indicators continuing to rise, reflecting strong financial support for the real economy, Xuan said.