China Unveils Fresh Monetary Policy Easing Package Ahead Of This Week's Trade Talks

2025-05-07 04:30:00 ET

Summary

• The People’s Bank of China cut its benchmark rate by 10bp and the reserve-requirement ratio by 50bp, while unveiling a series of additional measures to support the economy.
• After lots of jostling for better trade negotiating positions in recent weeks, the US and China finally confirmed they will begin trade talks this week.
• We anticipate that a de-escalation scenario could end up bringing tariffs back toward the original Liberation Day tariffs.

By Lynn Song

PBOC eases policy with long-awaited rate and RRR cuts

The People’s Bank of China ((PBOC)) announced a package of monetary policy support this morning. Highlights include a 10bp cut in the main benchmark 7-day reverse repo rate, and a 50bp cut to the required reserve ratio ((RRR)), bringing the respective levels to 1.4% and 9.0%. The interest rate cut takes effect on 8 May. The RRR cut, which is expected to add up to RMB 1tn in liquidity, takes effect on 15 May....

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