Economic calendar in Asia Thursday, March 20, 2025 – PBOC rate setting day

more to come

New Zealand economic growth data for Q4 2024 kicks the calendar off today. The New Zealand economy is, slowly, on the turn better after a string of 3*50bp interest rate cuts from the Reserve Bank of New Zealand.

The Australian employment report for February follows later. Another solid growth in jobs added is expected, with a steady result for the jobless rate also expected. I’ve seen a few partial indications of pockets of weaknesss in the jobs market, so today could be an interesting figure.

The People’s Bank of China Loan Prime Rate (LPR) setting is today. The sting has gone out of this, the Bank now use its 7-day repo rate as it main policy tool. This is currently at 1.5%. I’ve popped up more detail on this – scroll down if interested.

Currently the one-year Loan Prime Rate (LPR) is at 3.1% and the five-year LPR at 3.6%. According to a Reuters survey conducted earlier this week, China is expected to maintain its benchmark lending rates unchanged today. The survey, which included 33 market watchers, revealed that 88% anticipate both the one-year and five-year Loan Prime Rates (LPR) to remain steady

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

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In 2024, the People’s Bank of China (PBoC) implemented significant reforms to its monetary policy framework to enhance the effectiveness of its policy transmission and better support economic growth.

Shift to the 7-Day Reverse Repo Rate as the Main Policy Rate:

Traditionally, the PBoC utilized multiple policy rates, including the Medium-term Lending Facility (MLF) and Loan Prime Rate (LPR) rates, to influence market liquidity and interest rates. In June 2024, Governor Pan Gongsheng announced a strategic shift, designating the 7-day reverse repurchase (repo) rate as the primary short-term policy rate. This move aimed to streamline the monetary policy framework and improve the transmission of policy signals to the broader economy.

The 7-day reverse repo rate is pivotal in the PBoC’s open market operations, where it provides short-term liquidity to commercial banks. By focusing on this rate, the PBoC seeks to exert more direct influence over short-term market interest rates, thereby enhancing the responsiveness of financial institutions to policy changes.

Adjustments to Policy Rates:

In line with this new framework, the PBoC made several rate adjustments:

• July 2024: The 7-day reverse repo rate was reduced by 10 basis points from 1.8% to 1.7%.

• September 2024: The rate was further lowered by 20 basis points to 1.5%, marking the lowest level on record since at least 2012.

These reductions were intended to lower borrowing costs and stimulate economic activity amid signs of economic slowdown.

Changes to the Loan Prime Rate (LPR) and MLF Setting Dates:

The PBoC also reformed the mechanisms for setting the Loan Prime Rate (LPR) and the Medium-term Lending Facility (MLF) rates to align with the new policy framework:

• Loan Prime Rate (LPR): Previously, the LPR was closely linked to the MLF rate. With the shift to the 7-day reverse repo rate as the main policy rate, the PBoC aimed to reform the LPR setting mechanism to better reflect market rates and improve the transmission of monetary policy.

• Medium-term Lending Facility (MLF): The PBoC adjusted the timing of its MLF operations, conducting them later than usual and providing liquidity through open market operations. This approach was part of the broader strategy to reduce the prominence of the MLF rate in favor of the 7-day reverse repo rate.

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In October 2024 the PBOC cut the one-year LPR to 3.1% and the five-year LPR to 3.6%.

This article was written by Eamonn Sheridan at www.forexlive.com.