PBOC reaffirms future rate cuts stance after U.S. Fed holds steady

The People's Bank of China (PBOC) has pledged to intensify monetary policy adjustments and lower financing costs to support economic growth, according to a statement released on Friday after its first-quarter monetary policy committee meeting.

The meeting, held on Tuesday, emphasized the need for forward-looking, targeted and effective adjustments, including timely cuts to the reserve requirement ratio and interest rates in response to domestic and global economic conditions.

The meeting highlighted a more complex and challenging external environment, where global economic growth remains sluggish with rising uncertainties in inflation trends and monetary policy adjustments across key economies.

The U.S. Federal Reserve, on Wednesday, left its key borrowing rate unchanged at 4.25 percent to 4.5 percent amid rising inflation concerns and economic uncertainties.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, noted that aggressive domestic and foreign policies pursued by the new U.S. administration have altered the downward trend of inflation in the United States and globally.

"As a result, monetary policies across various countries will inevitably be affected, adding uncertainty to their interest rate cut process. This will also have some impact on China's monetary policy operations," Wang said.

Considering the current real estate market, changes in the external trade environment and overall price trends, Wang predicted that the window for PBOC rate cuts could open in the second quarter, with this year's scale of interest rate cuts expected to exceed those of last year.

While vowing to maintain ample liquidity and reduce comprehensive social financing costs, the PBOC also reaffirmed its commitment to stabilizing foreign exchange market expectations and forestalling any risk of exchange rate overshooting, aiming to keep the renminbi's exchange rate generally stable at a reasonable and balanced level.

In addition, the central bank vowed to closely monitor bond market trends and long-term yields.