(Jan 22): China’s central bank governor Pan Gongsheng signalled there is room to further cut interest rates and inject liquidity into the banking system, echoing guidance from his deputy last week to keep monetary policy supportive for growth in 2026.
“We will make use of various monetary policy tools including interest rate cut and reserve requirement ratio reductions in a flexible and highly efficient way,” Pan said in an interview with the official Xinhua News Agency published on Thursday.
“We still have some room to lower interest rates and the reserve requirement ratio,” he said, referring to the amount of cash banks must hold in reserve.
The People’s Bank of China (PBOC) has been seeking to reassure markets after previous reduction in policy rates fell short of economist expectations. The world’s second-largest economy continues to struggle with persistent deflation and weak confidence despite resilient exports.
Pan noted the PBOC has already trimmed structural lending rates by 25 basis points this year and expanded re-lending quotas for tech and private sectors. He also repeated a pledge to keep the yuan stable and create new liquidity mechanisms for non-bank financial institutions to maintain market stability.
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