China Keeps Key Rate Steady With Traders Betting On Cuts In 2025

Beijing Also Allowing Local Officials To Invest In More Areas With A Key Government Bond

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BEIJING - China has kept a key interest rate unchanged, a move widely expected by economists as it seeks to keep its powder dry ahead of possible escalation in trade tensions with the U.S.

The People's Bank of China (PBOC) held the interest rate on the one-year medium-term lending facility (MLF) steady at 2 percent, according to a statement on Dec. 25. Nine out of 10 economists surveyed by Bloomberg forecast no change. The rate was last cut in September by 30 basis points.

Earlier in December, policymakers pledged a "moderately loose" monetary policy—the first shift in stance in about 14 years—along with "more proactive" fiscal tools to bolster the economy.

But so far, they have refrained from announcing any concrete stimulus, reflecting their patience before the U.S. imposes the tariffs that U.S. President-elect Donald Trump threatened earlier.

Still, the market has ramped up bets on sizeable interest-rate reductions in 2025, sending China's sovereign bond yields to record lows.