China's Central Bank Signals 2025 Interest Rate Cuts as CSI 300 Falls, 10-Year Bond Yield Hits Record Low

Jan 3, 2025, 12:06 AM

China's central bank, the People's Bank of China (PBOC), has indicated a likelihood of cutting interest rates from the current level of 1.5% at an appropriate time in 2025, according to a report by the Financial Times. This move is part of a broader policy overhaul aimed at aligning China's monetary policy more closely with that of the US Federal Reserve and the European Central Bank. The PBOC's statement follows a period of economic pressure, with the CSI 300 index experiencing its worst start to a year since 2016, dropping 2.9% on the first trading day of 2025. Additionally, China's 10-year government bond yield fell to a record low below 1.6%, reflecting expectations of further monetary easing. The PBOC also conducted 7-day reverse repos, injecting 24.8 billion yuan at 1.5% on January 2, and 19.3 billion yuan at the same rate on January 3, while draining liquidity from the market over the week.