DBS Group Research economist Chua Han Teng predicts that the People’s Bank of China (PBOC) will likely hold the 1-year Loan Prime Rate steady at 3.00% on February 24, as the economic data for January is still being assessed. The analysis suggests that the central bank's policy remains cautiously supportive, demonstrated by a USD/CNY exchange rate fixed below the 7.0 mark. More significant easing measures are expected to emerge in the latter half of 2026.
"Currently, the PBOC is projected to keep the 1-year Loan Prime Rate unchanged at 3.00%, given that January's economic data are not yet fully available," Chua noted.
"In light of increasing geopolitical tensions, the central bank is maintaining a cautiously accommodative monetary policy," he added.
The lower USD/CNY fixing, which has dipped below the psychological level of 7.0, is indicative of this careful approach. Instead of adjusting the Loan Prime Rate or altering the 7-Day Reverse Repo Rate, the PBOC has been focusing on using structural tools to bolster specific sectors.
DBS expects that broader monetary easing measures will likely resume in the second half of the year.