China's central bank cuts key lending and discount rates by 25 basis points
The People's Bank of China has cut its central bank lending and central bank discount rates by 25 basis points. This adjustment, effective January 19, 2026, aims to enhance support for major strategies and key economic sectors.
Incentivizing key economic support
The People's Bank of China implemented the rate cuts to enhance the incentive role of its structural monetary policy instruments.
This strategic move is designed to encourage financial institutions to significantly increase their support for major national strategies, critical economic sectors, and identified weak links within the economy.
The central bank aims to channel more financial resources towards areas requiring targeted growth and stability.
The reduction of 25 basis points applies to both central bank lending and central bank discount rates, signaling a clear intent to stimulate specific segments of the financial system and real economy.
This policy adjustment becomes effective on January 19, 2026, providing a clear timeline for implementation and market response.
Specific rates for targeted instruments
Following the adjustment, the interest rates for central bank lending specifically targeting rural development and micro and small businesses have been set.
The 3-month rate is now 0.95 percent, the 6-month rate stands at 1.15 percent, and the 1-year rate is 1.25 percent.
Furthermore, the central bank discount rate has been adjusted to 1.5 percent.
Rates for pledged supplementary lending are now 1.75 percent, and specialized structural monetary policy instruments will carry an interest rate of 1.25 percent.
These detailed adjustments underscore the PBOC's focus on providing differentiated support to various segments of the economy, ensuring that financial aid reaches its intended beneficiaries effectively.