China keeps rates steady, hints more easing in 2025

Monetary authorities in China have left borrowing costs steady. Still, they committed to keep policy accommodative, signaling further easing moves are likely.

The People’s Bank of China (PBOC) kept the one-year loan prime rate, which influences both corporate and consumer loans, at 3.1%. The five-year loan prime rate, which impacts mortgages, is maintained at 3.6%.

The PBOC indicated a dovish stance.

What caused the move?

The decision was made as the PBOC evaluates the effect of the government measures to stimulate the world’s second-largest economy, before making further adjustments to monetary settings. This enables the PBOC to ensure stability and limit market volatility amid rising global uncertainties.

Related article: China moves to spur growth as economic prospects remain bleak

China’s retail sales grew at its strongest pace in eight months in October. However, domestic demand still requires a boost as the overall economic environment remains challenging.

Investors were also disappointed on China’s new debt package, as it primarily focused on refinancing existing local government debt rather than having more direct and aggressive spending to lift consumption.

Asset impact

Chinese stocks were flat after the PBOC kept rates steady, while the yuan held steady at 7.24 per US dollar.

The strategy remains to have an underweight stance on China, as concerns in tackling its low activity growth linger. The sustainability of the ongoing major stimulus package also remains to be investors’ top concern.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)

SOPHIA THERESE “PIA” BONIFACIO is a Markets Research Analyst at Metrobank’s Trust Banking Group, covering local and offshore macroeconomic research. She obtained her Bachelor’s degree in Economics with a Specialization in Financial Economics, cum laude, from the Ateneo de Manila University and is a Certified UITF Sales Person (CUSP). Pia enjoys long road trips and is a self-proclaimed milk tea connoisseur.

ANNA DOMINIQUE CUDIA, MBA, CSS, is the Head of Markets Research at Metrobank’s Trust Banking Group, spearheading the generation and presentation of financial markets insights to clients. She used to be with Metrobank’s Investor Relations, where she brought in international awards and took part in various multi-billion peso and dollar capital raising activities. She holds a Master of Business Administration (Finance) degree, with distinction, from the University of London, and industry certifications in finance. She is a naturally curious person and likes to travel here and abroad.