The People's Bank of China building with gold lettering and blue glass windows

The facade of the People's Bank of China, featuring gold Chinese characters and blue glass windows, is shown in Shanghai, China. By Andy Feng / Shutterstock.com.

Economy

China’s PBOC: How Data-Driven Monetary Policy Aims to Boost Economic Recovery

China‘s central bank vows ample liquidity, focused on domestic data, using diverse monetary tools for recovery.

byAndres Castro

September 22, 2025, 9:08 AM

Executive Summary

PBOC Governor Pan Gongsheng affirmed the central bank’s commitment to using diverse monetary policy tools to maintain liquidity, reduce funding costs, and bolster economic recovery.

China’s monetary policy decisions are primarily guided by domestic macroeconomic conditions and data, rather than external shifts like the Federal Reserve’s rate cut.

China has maintained its benchmark lending rates unchanged for the fourth consecutive month, indicating a cautious approach to major stimulus measures despite recent economic data.

The Story So Far

China’s central bank is navigating a domestic economic landscape characterized by mixed signals, including some loss of momentum alongside resilient exports and a stock market rally, which has led authorities to maintain benchmark lending rates unchanged and avoid immediate, broad stimulus measures. The People’s Bank of China’s monetary policy is primarily guided by internal macroeconomic conditions and data, rather than external shifts like the Federal Reserve’s recent rate cut, as it aims to use a comprehensive array of targeted tools to ensure liquidity and reduce funding costs to support economic recovery.

Why This Matters

The People’s Bank of China’s commitment to a data-driven, domestically focused monetary policy implies that its actions will primarily target China’s internal economic conditions rather than reacting to global central bank moves. This strategy involves utilizing a comprehensive array of tools to maintain liquidity and reduce funding costs to support economic recovery, but indicates a cautious stance against broad-based stimulus measures despite some economic headwinds.

Who Thinks What?

People’s Bank of China (PBOC) Governor Pan Gongsheng believes the central bank will comprehensively use various monetary policy tools to maintain ample liquidity, reduce funding costs, and bolster economic recovery, with decisions primarily guided by domestic macroeconomic conditions.

Market watchers observe that Chinese authorities appear to be in no rush to implement major stimulus measures, citing resilient exports and a rally in the stock market as factors contributing to the current cautious policy stance.

The People’s Bank of China (PBOC) Governor Pan Gongsheng has affirmed the central bank’s commitment to deploying a comprehensive array of monetary policy tools to maintain ample liquidity, reduce funding costs, and bolster the nation’s economic recovery. Speaking after the Federal Reserve’s recent rate cut, Pan emphasized that China’s monetary policy decisions are primarily guided by domestic macroeconomic conditions and data, rather than external shifts.

Monetary Policy Tools and Domestic Focus

Governor Pan stated that the PBOC would “comprehensively use a variety of monetary policy tools based on macroeconomic conditions and changes in the situation” going forward. He likened this approach to the data-based decision-making methodologies employed by other major central banks, including the Federal Reserve, the European Central Bank, and the Bank of Japan.

Initially, Pan indicated that the briefing, which focused on the financial sector’s achievements during the 14th five-year plan period (2021-2025), would not delve into short-term policy adjustments. However, he later addressed policy considerations in response to a reporter’s query regarding the PBOC’s stance following the Federal Reserve’s recent interest rate reduction.

Current Rate Stance and Market Observations

Despite suggestions last week that the Chinese economy is losing momentum, China has maintained its benchmark lending rates unchanged for the fourth consecutive month in September. This decision was largely in line with market expectations, following the central bank’s earlier choice to hold a main policy rate steady.

Market watchers observe that Chinese authorities appear to be in no rush to implement major stimulus measures. This cautious approach comes despite recent economic data, with analysts pointing to resilient exports and a rally in the stock market as factors contributing to the current policy stance.

Outlook on Economic Support

Ultimately, the PBOC’s strategy underscores a commitment to domestic stability and targeted intervention through diverse monetary tools. This approach aims to navigate current economic headwinds while avoiding broad-based stimulus, aligning with a data-driven framework common among global central banks.