China’s central bank said on Thursday it will cut interest rates on its structural monetary policy tools by 25 basis points, in a move aimed at strengthening targeted support for the economy as China heads into 2026.
The People’s Bank of China (PBOC) said the rate cut would apply to a range of targeted facilities used to channel low-cost funding to priority areas such as small and medium-sized enterprises, technological innovation, green development and rural revitalisation.
The move signals Beijing’s intent to rely more heavily on targeted easing rather than broad-based stimulus as it seeks to stabilise growth while containing financial risks.
China’s economy has been weighed down by a prolonged property sector downturn, weak consumer demand and soft private investment, prompting policymakers to roll out a series of fiscal and monetary support measures over the past year.
By lowering the cost of its structural tools, the PBOC aims to encourage banks to expand lending to sectors that policymakers see as strategically important, while avoiding excessive liquidity that could fuel asset bubbles or increase leverage in already stretched parts of the economy.
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