People's Bank of China Sets Monetary Policy Direction for 2025
Central Bank Aims to Increase Credit Supply and Support Economic Growth
On March 21, the People's Bank of China (PBOC) announced its commitment to maintaining ample liquidity within the financial system, while actively guiding financial institutions to boost credit supply.
This initiative is designed to ensure that the growth in social financing and the money supply aligns with China’s economic growth and general price level targets.
During its first-quarter monetary policy committee meeting for 2025, the PBOC outlined critical directions for future monetary policy.
The committee underscored the importance of strengthening monetary policy adjustments, indicating that both reserve requirement ratios (RRR) and interest rates may be reduced when deemed appropriate.
The committee additionally emphasized the need for careful monitoring and evaluation of the bond market from a macroprudential standpoint, particularly focusing on long-term interest rate trends.
The discussions also included strategies to deepen financial supply-side structural reforms.
Key measures proposed include optimizing re-lending policies to support technological innovation and industrial upgrades, as well as examining the creation of new structural monetary policy tools.
To further bolster investment and financing in the technology and innovation sector, the PBOC reiterated its dedication to promoting consumption and stabilizing foreign trade.
The committee highlighted the necessity of addressing challenges in the real estate market by halting its decline and facilitating recovery.
This involves improving the foundational systems of real estate finance and fostering the establishment of a new development model within the real estate industry.
China has set an economic growth target of approximately 5 percent for 2025, alongside an anticipated increase of around 2 percent in the consumer price index, as noted in this year’s government work report.
In light of these objectives, a moderately loose monetary policy has been adopted to support the overarching economic agenda.
This initiative is designed to ensure that the growth in social financing and the money supply aligns with China’s economic growth and general price level targets.
During its first-quarter monetary policy committee meeting for 2025, the PBOC outlined critical directions for future monetary policy.
The committee underscored the importance of strengthening monetary policy adjustments, indicating that both reserve requirement ratios (RRR) and interest rates may be reduced when deemed appropriate.
The committee additionally emphasized the need for careful monitoring and evaluation of the bond market from a macroprudential standpoint, particularly focusing on long-term interest rate trends.
The discussions also included strategies to deepen financial supply-side structural reforms.
Key measures proposed include optimizing re-lending policies to support technological innovation and industrial upgrades, as well as examining the creation of new structural monetary policy tools.
To further bolster investment and financing in the technology and innovation sector, the PBOC reiterated its dedication to promoting consumption and stabilizing foreign trade.
The committee highlighted the necessity of addressing challenges in the real estate market by halting its decline and facilitating recovery.
This involves improving the foundational systems of real estate finance and fostering the establishment of a new development model within the real estate industry.
China has set an economic growth target of approximately 5 percent for 2025, alongside an anticipated increase of around 2 percent in the consumer price index, as noted in this year’s government work report.
In light of these objectives, a moderately loose monetary policy has been adopted to support the overarching economic agenda.
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