PBOC: Cautious stance with structural easing tools – DBS

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.)