The Chinese cryptocurrency market maintains a basic interest rate amid economic support
The Chinese government has kept the medium-term lending rate unchanged, while comprehensive monetary easing measures were implemented a month earlier. Nevertheless, the slowdown in credit growth and increasing deflationary pressures have raised the demand for more flexible financial policy adjustments.
Interest rate policy of the People's Bank of China (PBOC)
On June 20, 2025, the NIFC - the interbank funding center, announced the basic interest rates for loans: the 1-year lending rate remains at 3.0% and the 5-year lending rate holds at 3.5%. This rate remains unchanged until further notice from the credit market.
This interest rate greatly affects corporate and household loans, especially mortgage rates, which serve as a benchmark for the domestic financial market.
Interest rate policy in the context of gradual decline
Last month, Chinese authorities reduced lending rates for the first time in 7 months, cutting 10 basis points, bringing the 1-year lending rate to 3.0%, while the 5-year lending rate decreased to 3.5%.
Many state-owned commercial banks have cut deposit interest rates by up to 25 basis points. Senior economist at Capital Economics, Zichun Huang, predicts that the central bank will continue to ease its policy, lowering borrowing rates by around 40 basis points by the end of this year.
Experts predict the role of future rate cuts
📉 China keeps the medium-term lending rate unchanged
On June 20, 2025, the People's Bank of China maintained the 1-year lending rate at 3.0% and the 5-year lending rate at 3.5%, reflecting a wait-and-see attitude after the unexpected cut last month.
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— Wind Info (@WindInfoUS) June 20, 2025
Analysts' views on policy moves
Bruce Pang, associate professor at CUHK Business School, noted that Chinese policymakers have expressed satisfaction with the current monetary policy and the results achieved.
He stated that politicians are increasingly inclined to maintain a limited role for easing measures, focusing on finding alternative solutions to stimulate growth.
Meanwhile, Marco Sun from MUFG Bank predicts that the central bank will maintain a patient stance, only adjusting policies when external geopolitical risks become negative.
Nomura's economist emphasized that the Chinese government may not rush to expand financial stimulus packages in the short term, but is expected to strengthen policy support in the second half of the year, especially as the impact of measures taken in May becomes more evident.
The renminbi is facing less pressure in the foreign exchange market, allowing the People's Bank of China more room to adjust policies in the future.
— Bruce Pang, Associate Professor at CUHK Business School
Foreign exchange policy and intentions to expand the role of international cryptocurrency
Zhu Hexin, head of the State Administration of Foreign Exchange, stated that China's ability to control foreign exchange market fluctuations has significantly improved. Along with this, Governor Pan Gongsheng emphasized the goal of increasing the international application of the digital renminbi, based on a multipolar global monetary system.
In the context of the offshore renminbi having increased more than 2% this year, it is trading at 7.1805 renminbi/USD, recovering from a record low of 7.4287 in early April.
Short-term economic strategy and the role of trade agreements
Ho Woei Chen, an economist at UOB, emphasized that short-term economic stability depends on whether the U.S. and China reach a trade agreement. This will determine the necessity of other policy stimulus measures.
Predictions suggest that the required reserve ratio (RRR) may be further reduced by 50 basis points, while the seven-day reverse repo rate is expected to drop by 10 basis points in the fourth quarter of this year, aiming to bring cryptocurrency interest rates lower.
Traders from many organizations in the market also commented that key interest rates tend to move in line with the seven-day reverse repo rate, the main policy rate, which has decreased to 1.40% since May 8.
Source: https://tintucbitcoin.com/trung-quoc-dung-giam-lai-suat-dien-tu/
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