By Zhou Lanxu | chinadaily.com.cn | Updated: 2026-01-15
China still has room for cuts in the reserve requirement ratio and interest rates this year, with a firm yuan performance and stabilizing bank net interest margins providing the scope, said Zou Lan, vice-governor of the People’s Bank of China.
The average RRR for financial institutions currently stands at 6.3 percent, indicating that further RRR cuts remain possible, Zou said at a news conference on Thursday.
As for policy interest rate benchmarks, external constraints are not particularly binding at the moment: the renminbi exchange rate has remained relatively stable, and the US dollar is in a rate-cutting cycle, Zou said.
“Overall, the exchange rate does not pose a strong constraint,” Zou said.
Domestically, banks’ net interest margins have shown signs of stabilizing since 2025, Zou said, while the latest cut in the rates of various structural monetary policy tools will help reduce banks’ funding costs and create additional room for further rate cuts.
Zou added that the central bank will continue to increase liquidity injections and will flexibly conduct operations such as buying and selling government bonds to create a supportive monetary and financial environment for the smooth issuance of government debt.