Core Viewpoint - The People's Bank of China (PBOC) emphasizes the importance of maintaining reasonable interest rate relationships to ensure effective monetary policy transmission, as highlighted in the Q3 2025 monetary policy execution report [1][2]. Group 1: Interest Rate Relationships - The report identifies five key interest rate relationships: the relationship between central bank policy rates and market rates, the relationship between asset and liability rates of commercial banks, the relationship between different asset yields, the relationship between short-term and long-term rates, and the relationship between different risk rates [3][4]. - The relationship between central bank policy rates and market rates is crucial; market rates should ideally fluctuate in sync with policy rates to ensure effective transmission of monetary policy [3][4]. - The relationship between commercial banks' asset and liability rates indicates that while deposit and loan rates generally move in the same direction, discrepancies due to factors like competition can compress banks' net interest margins, affecting their ability to support the real economy [3][4]. Group 2: Implications of Interest Rate Discrepancies - Discrepancies in interest rates, such as loans being priced lower than government bond yields, violate risk pricing principles and are unsustainable [4][5]. - The report suggests that the PBOC's focus on these interest rate relationships is not merely definitional but aims to enhance execution, as imbalances can hinder the formation and transmission of market-based interest rates [4][5]. Group 3: Future Monetary Policy Directions - The PBOC plans to continue transforming its monetary policy framework, emphasizing price-based regulation and the importance of interest rate marketization reforms to improve the transmission of interest rates across different financial markets [6][7]. - The expectation is that the interest rate corridor will narrow, leading to more precise and synchronized transmission of policy rates to market rates [7][8]. - The trend of lowering deposit rates is expected to continue, with larger state-owned banks typically leading the way, followed by smaller banks [8].