BEIJING (Reuters) -China’s central bank said it was likely it would cut interest rates from the current level of 1.5% “at an appropriate timeâ€� in 2025, the Financial Times reported on Friday citing comments the bank made to the newspaper.
The People’s Bank of China said that it would prioritise “the role of interest rate adjustments” and move away from “quantitative objectives” for loan growth, as it embarks on a programme of interest rate reform that government advisors have called “an arduous task.”
China’s main rate is its seven-day reverse repo rate, which it last cut from 1.7% to 1.5% in late September.
During a high-level economic agenda-setting meeting in December, China’s top leaders vowed to cut interest rates “in a timely manner” and reduce the amount of capital banks must hold in reserve, as part of a broader effort to spur lending and investment in the ailing economy.
The country’s top policymakers also pledged at the Central Economic and Work Conference to increase the budget deficit and loosen monetary policy, as the world’s second-largest economy braces for more trade tensions with the United States as Donald Trump returns to the White House.
China’s economy showed an over-reliance on manufacturing and exports last year, with household demand disappointing as a severe property market crisis erodes consumer wealth and most government stimulus goes to producers and infrastructure.
Government advisers are recommending Beijing keeps its growth target unchanged this year, but have also called for more forceful fiscal stimulus to bolster depressed 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 would implement more proactive policies to promote growth over 2025.
($1 = 7.2994 Chinese yuan renminbi)
