BEIJING – China’s central bank, the People’s Bank of China (PBOC), has introduced fresh monetary easing measures to maintain economic stability amid escalating trade tensions with the United States.

Pan Gongsheng, Governor of the PBOC, announced a 0.25% cut to the main policy interest rate, bringing it down to 1.5%, on Wednesday (7/5).

Gongsheng stated that the move was a direct response to the imposition of high import tariffs by President Donald Trump, which came into effect in early April 2025.

In addition to lowering the benchmark rate, the PBOC also reduced the reserve requirement ratio for banks, enhancing their capacity to extend credit and bolstering market liquidity.

The central bank also trimmed interest rates on other monetary instruments. The 7-day reverse repo rate was lowered by 0.1%.

This rate cut is expected to be followed soon by a reduction in the loan prime rate (LPR), the country's de facto benchmark lending rate.

Furthermore, interest rates on relending and Pledged Supplementary Lending (PSL) programmes—used to support strategic sectors such as agriculture and small and medium-sized enterprises (SMEs)—were cut by 0.25%.

To stimulate the housing market and consumer spending, the Chinese government also reduced mortgage interest rates under the housing provident fund scheme.

The mortgage rate for loans with a tenor exceeding five years has been lowered to 2.6%, down from 2.85%. (EF/KR/ZH)