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CHINA PRESS: PBOC To Prioritise Structural Tools In 2025

CHINA PRESS
EM BulletAPACChinaEmerging Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets

The People’s Bank of China is expected to prioritise structural tools including the Reserve Requirement Ratio over aggregate tools such as interest rate cuts in 2025, as the central bank remains concerned over banks’ net interest margin, according to Guan Tao, former senior official at the State Administration of Foreign Exchange. A downward trend in bank liability costs may be a leading indicator for central bank interest rate cuts this year, Guan added. Chinese banks earn more than 70% of operating income from interest, unlike U.S. and European banks which earn around half, Guan observed.

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The People’s Bank of China is expected to prioritise structural tools including the Reserve Requirement Ratio over aggregate tools such as interest rate cuts in 2025, as the central bank remains concerned over banks’ net interest margin, according to Guan Tao, former senior official at the State Administration of Foreign Exchange. A downward trend in bank liability costs may be a leading indicator for central bank interest rate cuts this year, Guan added. Chinese banks earn more than 70% of operating income from interest, unlike U.S. and European banks which earn around half, Guan observed.