China: PBOC Lowers Key Bank Loan Rate to Rekindle Slower Growth
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The Bank of Russia lowered its policy rate by 50 basis points to 15.5%, continuing a multi-step easing cycle aimed at easing financing pressures on firms even as consumer prices have accelerated. The move prioritizes supporting activity over immediate inflation containment and raises risks for exchange-rate and inflation dynamics unless growth firms up.
China’s central bank has limited firepower to halt a deflationary slide
Regulatory guidance that nudged some banks to trim US‑Treasury holdings shook currency and bond markets, underlining how fragile domestic demand and a constrained policy tool kit limit the People’s Bank of China’s ability to stop falling prices. Broader pressures — from managed FX policy, reserve‑management trade‑offs and episodic capital outflows tied to travel and global rate moves — mean Beijing can only buy time, not quickly restore durable inflation.
PBOC Signals Potential Pivot to Overnight Rate as Policy Guide
The People’s Bank of China has reworked its monthly briefing to foreground short-term money-market metrics, notably comparing overnight repo costs with the seven‑day reverse repo. Seen alongside recent easing of lending benchmarks, the change looks like a deliberate move to lean on the overnight interbank rate as the central operational signal for liquidity management.
China’s resale prices register smallest monthly drop in eight months
January data show resale prices across 70 Chinese cities fell 0.54% month‑on‑month — the smallest monthly decline in eight months — while new‑home prices excluding subsidized units slipped 0.37%, unchanged from December. The readings coincide with a People’s Bank of China cut to its main bank loan benchmark to a record low, a move that eases financing costs and could help stabilize transactions but is unlikely by itself to deliver a sustained housing recovery.
Xi Jinping Urges Pivot to Domestic Demand to Stabilize China’s Growth
President Xi Jinping instructed policymakers to make domestic consumption the primary engine of growth and to realign investment plans accordingly. The guidance, published by the party journal Qiushi, signals coordinated fiscal and industrial measures aimed at bolstering household spending and shoring up investment momentum.
China Introduces Permanent Finance Regime to Back Rural Revitalization
China has created a standing financing regime to support rural revitalization and reduce the risk of communities slipping back into poverty. Regulators will allow agricultural loans tied to anti‑poverty programs to carry higher non‑performing rates—with a tolerance set at three percentage points above a lender’s average—without triggering penalties.
Bank of England likely to keep Bank Rate steady as inflation proves sticky
The Bank of England’s Monetary Policy Committee is widely expected to leave the Bank Rate unchanged at 3.75% in its first meeting of the year as mixed signals — persistent inflation but signs of a cooling labour market — warrant a cautious, data-dependent pause. Markets have already trimmed the odds of near-term moves and will focus on the committee’s language and the accompanying quarterly projections for guidance on the timing of any easing.
China curbs auto price war with ban on below‑cost car sales
Beijing’s market regulator issued final rules forbidding automakers from selling cars below a comprehensive measure of cost, aiming to halt prolonged discount battles that have eroded industry margins. The move broadens the cost definition to include manufacturing, administrative, financing and sales expenses, pressuring low-margin players and supporting profitability for larger manufacturers.