PBOC Vows to Fine-Tune Rate System to Boost Policy Efficiency
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The People’s Bank of China has pledged to further refine its interest rate framework, seeking to ensure that monetary policy is transmitted more effectively through the financial system.
In its third-quarter monetary policy report for 2025, released Tuesday, the central bank reiterated its commitment to strengthening the guidance of key policy rates and optimizing its policy framework. The pledge builds on a series of recent steps, including a move to standardize deposit rate pricing and crack down on irregular interest subsidies — measures aimed at boosting the efficiency of monetary tools.
Since designating the seven-day reverse repo rate as its primary policy rate in July 2024 — replacing the previously used medium-term lending facility rate — the PBOC has prioritized aligning market rates more closely with policy intentions.
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- The People’s Bank of China aims to improve monetary policy transmission by refining its interest rate framework and aligning market rates with policy rates.
- The PBOC identified concerns such as loan rates dropping faster than deposit rates and corporate borrowing rates falling below sovereign yields, which may threaten financial stability.
- Measures include standardizing deposit rates and addressing irregular subsidies to support effective capital allocation and maintain macroeconomic balance.
- July 2024：
- The People’s Bank of China designated the seven-day reverse repo rate as its primary policy rate, replacing the previously used medium-term lending facility rate.
- November 11, 2025：
- The People’s Bank of China released its third-quarter monetary policy report for 2025, reiterating the commitment to strengthen policy guidance and optimize its interest rate framework.
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