PSL rate cut to 1.5 percent as targeted lending quotas expand
The People's Bank of China has cut the one-year Pledged Supplementary Lending rate by 25 basis points to 1.5 percent and expanded targeted lending quotas by RMB700 billion. The measures aim to support infrastructure, technology upgrades, and small private businesses.
Targeted liquidity across four pillars
The central bank lowered the one-year Pledged Supplementary Lending (PSL) rate from 1.75 percent to 1.5 percent while extending PSL coverage to six strategic networks: water systems, modern power grids, computing networks, next-generation communications, urban underground pipelines, and logistics.
In parallel, the facility for sci-tech innovation and technological upgrading saw its quota raised by RMB200 billion to RMB1.4 trillion, with the central bank's funding support ratio increasing from 60 percent to 100 percent.
The PBOC also expanded relending and rediscount quotas for agriculture and small firms by RMB500 billion to RMB4.85 trillion, allocating RMB300 billion specifically to private firms.
Groundwork for the five-year plan
These adjustments follow guidelines set by the CPC Central Committee Political Bureau and the State Council to deliver an appropriately accommodative monetary policy.
By directing lower-cost central bank liquidity to policy banks and local commercial lenders, the PBOC seeks to stimulate domestic demand and accelerate high-quality development.
The central bank reiterated its commitment to keeping liquidity ample and steering interest rates to support the upcoming 15th Five-Year Plan.
Precision tools with structural limits
The PBOC relies on structural credit reallocation rather than broad rate cuts to jump-start domestic growth.
Covering 100 percent of sci-tech loans reduces bank risk, but targeted facilities cannot fix sluggish private credit demand alone.
Structural engineering remains an incomplete substitute for broad consumer-led stimulus.