PBoC: 2025 second quarter China monetary policy implementation report

PBoC: 2025 second quarter China monetary policy implementation report

The People's Bank of China (PBoC) has released its second-quarter monetary policy implementation report, providing insights into the country's economic landscape and future policy directions. The report, issued on July 2, 2025, reflects the recent financial data and the government's efforts to stimulate loan demand and consumption.

July financial data indicated a decline in household loan stocks, marking the first such decline in 20 years. This trend, coupled with a rising deposit trend despite a declining loan demand, suggests that more policy support is needed. The report highlights that various policies have been implemented recently to boost consumption, including reductions in kindergarten fees and interest subsidies for loans to consumers and service companies. These measures aim to prioritize consumption and create a better employment environment, thereby expanding demand.

The PBoC's Q2 Banker Survey Report [1] indicates that bankers expect further loosening in monetary policy in the third quarter. In line with this expectation, the report suggests that a further 30 basis points (bps) policy rate cut is likely in this cycle. This prediction is supported by the anticipated incremental fiscal support in the fourth quarter and the expected slowdown in Chinese economic growth due to weakened exports and global tariffs.

The report underscores the need for continued policy support to address the insufficient financing demand by both households and enterprises. It also highlights the services industry as a key lever for boosting employment and demand. As the global economic environment remains challenging, the PBoC's monetary policy is poised to play a crucial role in stabilizing the Chinese economy.

References:
[1] https://www.mufgresearch.com/fx/china-july-financial-data-implies-further-policies-to-support-loan-demand-14-august-2025/