The central bank announced it will cut reserve requirements and interest rates at an appropriate time. What are the signs of this "appropriate time"? Experts interpret.

CCTV reporters learned from the People's Bank of China yesterday (4th) that the guiding principle of China's monetary policy in 2025 will be "moderately loose." Various monetary policy tools will be comprehensively used, and the reserve requirement ratio and interest rates will be adjusted as needed based on the domestic and international economic and financial situation and the operation of the financial market to maintain ample liquidity and stable growth in the overall financial volume. 1. What is the purpose of reducing the reserve requirement ratio and interest rates? What signals indicate the timing? So, what is the purpose of reducing the reserve requirement ratio and interest rates? Is it a part of a moderately loose monetary policy? What signals indicate the timing of the adjustment? Experts provide explanations: Chief Researcher of Zhonglian Dong Ximiao: "Reducing the reserve requirement ratio" refers to lowering the deposit reserve ratio, which is a significant policy measure. Specifically, reducing the reserve requirement ratio will inject more long-term funds into the market, maintain liquidity, better meet the financing needs of enterprises and residents, and help banks reduce funding costs, ensuring the continuity of serving the real economy and reducing the financing costs for enterprises and residents. Currently, the weighted average deposit reserve ratio of financial institutions in China is 6.6%, and there is both space and necessity for reducing the reserve requirement ratio. It is expected that the People's Bank of China will implement reserve requirement ratio cuts multiple times in 2025. Chief Researcher of Zhonglian Dong Ximiao: "Reducing interest rates" generally refers to lowering deposit interest rates and loan interest rates. It is expected that the People's Bank of China will continue to lower policy rates, guide banks to lower deposit rates, promote the continued decline of the loan prime rate (LPR) in the loan market, thereby reducing actual loan interest rates, reducing the expenditure on interest for enterprises and residents. Chief Researcher of Zhonglian Dong Ximiao: The working conference of the People's Bank of China in 2025 proposed adjusting the reserve requirement ratio and interest rates as needed based on the domestic and international economic and financial situation and the operation of the financial market. This is not only an important manifestation of a moderately loose monetary policy but also an important means to achieve moderate loosening. If external instability increases and domestic economic downward pressure intensifies, the timing and intensity of reserve requirement ratio and interest rate reductions will be advanced. If the domestic economy maintains a stable recovery trend, the necessity and possibility of reducing reserve requirement ratio and interest rates may decrease. In summary, in 2025, the moderately loose monetary policy will increase the countercyclical and cross-cycle adjustment efforts, making it more forward-looking, effective, and targeted, creating a more suitable monetary and financial environment for stabilizing growth, promoting consumption, and expanding domestic demand. 2. How does the moderately loose monetary policy support the real economy? In 2025, China's monetary policy stance will shift from "prudent" to "moderately loose." How does a moderately loose monetary policy support the real economy? How will it be implemented? CCTV reporters interviewed officials from the People's Bank of China to provide authoritative interpretations on these key issues. In 2025, China will further improve the market-oriented interest rate control mechanism, continuously strengthen the execution of interest rate policies, enhance interest rate self-discipline management, enhance banks' ability to autonomously and rationally price, and consider both the sound operation of the banking industry and the stability of the comprehensive financing costs of society to create a favorable interest rate environment that supports consumption and investment. Zou Lan, Director of Monetary Policy Department of the People's Bank of China: Maintain a reasonable growth in overall financial volume, use various monetary policy tools comprehensively, maintain ample liquidity, guide financial institutions to explore effective financing demands, increase social financing scale and monetary supply in line with economic growth and expected price level objectives. In 2025, China will leverage the dual functions of both total and structural monetary policy tools to guide more financial resources towards urgently needed areas, continuously enhance the efficiency of financial support for economic structural adjustments, transformation and upgrading, and transitioning of new and old economic drivers. Zou Lan, Director of Monetary Policy Department of the People's Bank of China: Deepen the market-oriented reform of the exchange rate, strengthen expectation guidance, effectively deal with external shocks, firmly guard against the risk of exchange rate overshooting, and keep the RMB exchange rate basically stable at a reasonable and balanced level. In 2025, China will effectively coordinate monetary policy with other macroeconomic policies such as fiscal, industrial, and regulatory policies, ensure policy consistency, focus more on supporting the expansion of consumption and effective investment, enhance the overall policy effectiveness, further smooth policy transmission. Jin Penghui, Director of the Shanghai Head Office of the People's Bank of China: Implement the moderately loose monetary policy, focus on expanding domestic demand, stabilizing expectations, stimulating vitality, pay more attention to consumption, support stable foreign trade and foreign investment, help Shanghai play a better leading role. 3. How will the "Five Major Articles" in finance be promoted? Currently, China has established the policy framework for the five major articles in financial technology, green finance, inclusive finance, pension finance, and digital finance. How will the promotion of the "Five Major Articles" be carried out in 2025? In terms of financial technology, continuously optimize the policy on technology innovation and technological transformation re-lending, increase tool support. Innovate in the field of technology loans, technology innovation bonds, and other products, actively nurture a financial market ecosystem that supports technology innovation. In green finance, accelerate the promotion of green finance standardization, improve the quality and efficiency of green finance. Optimize the implementation of tools supporting carbon emission reduction, enhance green finance assessment, innovate green loans and bond products, and form a complete spectrum of financial products including carbon neutrality, green, and transformation. In inclusive finance, continue to implement the five major special actions to support the comprehensive revitalization of rural areas, improve the credibility system and financial service effectiveness for private small and medium enterprises, promote the implementation of policies such as entrepreneurship guarantees and student loans, enhance the availability, convenience, and coverage of financial services in the inclusive field. In pension finance, focus on improving the pension financial support system, explore characteristic products and service models for pension finance, improve the efficiency of pension re-lending fund utilization, guide financial institutions to increase support for the health industry, pension industry, and silver economy. In digital finance, optimize financial services for digital economies, formulate policy measures to support new industrialization, cultivate a high-level financial data market, enhance the digitalization and intelligence level of financial services. Chao Kejian, President of the Beijing Branch of the People's Bank of China: Focus on the continuous efforts in the financial "Five Major Articles," promote the implementation and refinement of relevant policy documents, encourage financial institutions to invest more resources in key areas. Establish a sound system for monitoring, evaluating, and utilizing data on the financial "Five Major Articles." This article is reprinted from CCTV News, GMTEight Editor: Chen Wenfang.