PBOC’s Tightrope Walk: Why Their “Cautious” Moves Could Reshape China’s Financial Future—Are You Ready to Ride the Wave?
Ever wonder why the People’s Bank of China is playing it so cool with the 1-year Loan Prime Rate lately? Holding steady at 3.00% feels like they’re tiptoeing through a surprise party of unfolding January data and gnawing geopolitical tensions. You see, while some might expect a rate cut, the PBOC’s strategy seems more like a chess game—keeping the USD/CNY fixing comfortably below that psychological 7.0 mark, leaning heavily on smart, surgical structural tools rather than broad brush moves. It’s almost like they’re whispering, “Let’s wait and watch… the real easing party starts later in 2026.” Intriguing, right? This cautious stance could be signaling a big play for the second half of the year, where broader easing might finally take center stage. Stick with me—I promise this is just the beginning of a fascinating story about patience, strategy, and monetary mojo. LEARN MORE
DBS Group Research economist Chua Han Teng expects the People’s Bank of China to keep the 1-year Loan Prime Rate at 3.00% on February 24, as January data are still unfolding. The report says policy remains cautiously accommodative, reflected in a lower USD/CNY fixing below 7.0, with reliance on structural tools and broader easing anticipated toward the second half of 2026.
Loan Prime Rate seen unchanged for now
“The PBOC is expected to keep the 1-year Loan Prime Rate (LPR) unchanged at 3.00%, as January economic data have yet to fully unfold.”
“The central bank is maintaining a cautiously accommodative monetary policy stance amid heightening geopolitical tensions.”
“This stance is being reflected in a lower USD/CNY fixing, which has breached the psychological 7.0 level.”
“The PBoC has been relying more on structural tools to support targeted sectors rather than cutting the Loan Prime Rate or the 7-Day Reverse Repo Rate.”
“We expect the PBoC to resume broader easing toward 2H.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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