The People's Bank of China (PBOC) is set to lower interest rates this year, marking a significant pivot towards a more conventional monetary policy framework akin to those of the US Federal Reserve and the European Central Bank. According to recent statements, the PBOC plans to reduce rates from the current 1.5% level "at an appropriate time" in 2025, emphasizing adjustments in interest rates over quantitative credit growth targets.

This policy recalibration comes as China anticipates deeper deflationary pressures in certain sectors, with interest rates expected to decline. The move aims to manage the country's colossal state debts and property financing more regionally, while massive fiscal stimuli are anticipated to rev up the economy. Despite these efforts, China faces the ongoing challenge of navigating its demographic downturn.