Economy

China’s Economy: Will the PBOC’s Easing Measures in Q4 2025 Revitalize Growth?

Goldman Sachs predicts China‘s central bank will ease policy in Q4 2025 due to slowing growth.

September 29, 2025, 6:17 AM

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.

Executive Summary

Goldman Sachs forecasts China’s central bank will ease monetary policy in Q4 2025, projecting a 10-basis-point policy rate cut and a 50-basis-point reduction in the reserve requirement ratio due to slowing economic momentum.

The People’s Bank of China (PBOC) maintained a dovish bias in its recent meeting, calling for “appropriately loose monetary policy” and showing a more cautious outlook by shifting its economic description.

The PBOC’s future policy decisions are data-dependent, with potential easing hinging on incoming economic data and whether the country’s full-year growth remains on track to meet its “around 5 percent” target.

The Story So Far

China’s central bank (PBOC) is anticipated to ease monetary policy in late 2025 due to a projected economic slowdown, with year-on-year growth expected to drop towards 4%, putting pressure on policymakers to bolster growth. This expectation is reinforced by the PBOC’s maintained “dovish bias” and recent emphasis on implementing an “appropriately loose monetary policy” and “strengthening countercyclical adjustments,” alongside a subtle language shift indicating a more cautious outlook on the economy, though any concrete policy action remains data-dependent.

Why This Matters

The anticipated monetary easing by China’s central bank in Q4 2025, involving rate and reserve requirement cuts, signals a proactive effort to counter slowing economic momentum and bolster growth, reflecting underlying challenges to the nation’s economic recovery. However, the data-dependent nature of the People’s Bank of China’s decisions means these actions are not guaranteed if official growth targets are met, introducing an element of uncertainty into the economic outlook.

Who Thinks What?

Goldman Sachs analysts project that China’s central bank will implement monetary easing, including a policy rate cut and a reserve requirement ratio reduction, in the fourth quarter of 2025 due to an anticipated economic slowdown, while also noting that policy action is data-dependent and might not occur if growth targets are met.

The People’s Bank of China (PBOC) officials maintain a dovish bias, emphasizing the need to “better implement an appropriately loose monetary policy” and strengthening countercyclical adjustments, with a subtly more cautious outlook on the economy.

China’s central bank is anticipated to ease its monetary policy in the fourth quarter of 2025, according to a recent forecast by Goldman Sachs, as the nation’s economic momentum slows and policymakers face increasing pressure to bolster growth.

The projection includes a 10-basis-point cut to the policy rate and a 50-basis-point reduction in the reserve requirement ratio. These measures are expected to be implemented as China’s year-on-year growth is projected to slow sharply towards 4 percent, compared to a higher base from the previous year.

However, Goldman Sachs analysts noted that the People’s Bank of China (PBOC) operates on a data-dependent decision-making process. This leaves open the possibility of no policy action if the country’s full-year economic growth remains on track to meet its “around 5 percent” target.

Recent PBOC Stance

This forecast follows the PBOC’s third-quarter Monetary Policy Committee meeting, held earlier in the week. During this meeting, officials maintained a dovish bias, suggesting a leaning towards accommodative policies, but provided few new signals regarding immediate action.

In a subsequent meeting note, the PBOC emphasized the need to “better implement an appropriately loose monetary policy.” The central bank also called for strengthening countercyclical adjustments and leveraging both the aggregate and structural functions of monetary policy tools.

Goldman Sachs analysts observed a subtle shift in the PBOC’s language regarding the economy. The central bank replaced its prior description of the economy “showing positive momentum” with the phrase “making strides while maintaining stability.” This latter phrasing, last used in the first quarter, suggests a more cautious outlook from policymakers.

Outlook

The potential for monetary easing underscores the ongoing challenges China faces in sustaining its economic recovery. The PBOC’s future actions will largely hinge on incoming economic data and its assessment of whether current growth trajectories align with official targets.