Core Viewpoint - The People's Bank of China has implemented a structural "rate cut" by lowering various structural monetary policy tool rates, aiming to enhance bank lending in key areas and support the overall credit environment for the year [1][2][3]. Group 1: Rate Adjustments - The central bank has reduced the re-lending and re-discount rates by 0.25 percentage points, with new rates set at 0.95%, 1.15%, and 1.25% for 3-month, 6-month, and 1-year re-lending respectively, and a re-discount rate of 1.5% [1]. - The adjustment is expected to save the banking system approximately 14.25 billion yuan in annual interest costs [3]. Group 2: Impact on Banking Sector - The rate cuts are designed to boost banks' willingness to lend, particularly in the first quarter, which is typically a peak period for bank credit issuance [2]. - The structural "rate cut" is seen as a dual empowerment for banks, potentially increasing overall financing demand while also lowering banks' interest costs, thereby stabilizing net interest margins [2]. Group 3: Policy Support and Economic Outlook - The decision to lower rates reflects a commitment to a moderately accommodative monetary policy, particularly in support of key sectors such as technology, consumption, and elderly care [3]. - The current average reserve requirement ratio for financial institutions stands at 6.3%, indicating room for further reductions in reserve requirements and interest rates [3][4].

Core Viewpoint - The People's Bank of China (PBOC) has implemented a structural interest rate cut, effective January 19, 2026, reducing the re-lending and re-discount rates by 0.25 percentage points, which aims to enhance credit support in key sectors and facilitate economic structural transformation [1]. Group 1 - The new rates for re-lending to support agriculture and small enterprises are set at 0.95% for 3 months, 1.15% for 6 months, and 1.25% for 1 year, while the re-discount rate is 1.5% and the mortgage supplementary loan rate is 1.75% [1]. - The PBOC plans to introduce eight policy measures to boost credit in key areas and strengthen the support of structural monetary policy tools, indicating that there is still room for further interest rate cuts and reserve requirement ratio (RRR) reductions this year [3][4]. - The current implicit lower limit for the RRR is around 5.0%, suggesting approximately 1.3 percentage points of potential RRR reduction, while the use of government bond trading operations can inject long-term liquidity into the banking system [3]. Group 2 - The PBOC's monetary policy tools are diverse, including RRR cuts, government bond trading, Medium-term Lending Facility (MLF), and reverse repos, which can help maintain a stable and ample liquidity environment in the market [3]. - The adjustments in commercial property loan down payment ratios to a minimum of 30% reflect the PBOC's ongoing efforts to stimulate the real estate market and support economic recovery [4].

Core Viewpoint - The People's Bank of China has implemented its first structural interest rate cut of the year, reducing the re-lending and re-discount rates by 0.25 percentage points to stimulate credit growth in key sectors and support economic restructuring [4]. Group 1 - The interest rate cut will take effect from January 19, 2026, making borrowing from the People's Bank of China cheaper for banks [4]. - The new rates for re-lending to support agriculture, small enterprises, and other key areas are set at 0.95% for 3-month, 1.15% for 6-month, and 1.25% for 1-year [4]. - The re-discount rate is now 1.5%, while the mortgage supplementary loan rate is set at 1.75%, and the rate for special structural monetary policy tools is 1.25% [4].

Report Summary Core View - The central bank's decision on January 15, 2026, to cut the rediscount and relending rates is not a general - type interest rate cut. It aims to encourage commercial banks to lend to specific sectors through the structural monetary policy tool [1][3]. Key Information - **Interest Rate Adjustment Details**: Starting from January 19, 2026, the central bank will cut the relending and rediscount rates by 0.25 percentage points. After the cut, the 3 - month, 6 - month, and 1 - year relending rates for supporting agriculture and small businesses are 0.95%, 1.15%, and 1.25% respectively. The rediscount rate is 1.5%, the pledged supplementary lending rate is 1.75%, and the special structural monetary policy tool rate is 1.25% [3]. - **Function of Structural Monetary Policy Tool**: It is a targeted regulation system established by the central bank. It uses relending and incentive funds to guide financial institutions to precisely support key areas of the national economy. There are long - term and phased types, and it adopts a "lend first, borrow later" mechanism [3]. - **Impact on Commercial Banks**: After the adjustment, the 1 - year relending rate for supporting agriculture and small businesses is 1.25%, lower than the current 7 - day reverse repurchase rate in the open market (1.4%). This gives commercial banks a higher interest rate spread, motivating them to lend to specific sectors and achieving policy - oriented capital support [3]. - **Impact on the Bond Market**: After the news was released in the afternoon, the 10 - year Treasury bond futures briefly rose and then fell because this interest rate cut is not a general one [3].

Group 1 - The People's Bank of China (PBOC) has implemented multiple financial policies to support high-quality development of the real economy [1] - The PBOC has decided to lower the re-lending and re-discount rates by 0.25 percentage points, effective January 19, 2026, with new rates set at 0.95%, 1.15%, and 1.25% for 3-month, 6-month, and 1-year agricultural and small business re-lending respectively [2] - The PBOC has increased the re-lending quota for agricultural and small business support by 500 billion yuan and established a 1 trillion yuan re-lending for private enterprises to enhance financial support for small and micro enterprises [2] - An additional 400 billion yuan has been allocated to the re-lending quota for technological innovation and transformation, bringing the total to 1.2 trillion yuan, with a focus on high R&D investment private small and medium enterprises [2] Group 2 - The PBOC has expanded the carbon reduction support tool to include projects with direct carbon reduction effects, such as energy-saving renovations and green upgrades [3] - The carbon reduction support tool will operate quarterly, providing 1-year re-lending funds with an annual operation limit of 800 billion yuan [3] - The PBOC will determine quarterly operation volumes based on monetary policy needs and the loan issuance situation by financial institutions [3]