Story perspectives

China's PBOC Considers Bond Purchases Amid Rising Yields

1/25/2025

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Summary

Story summary

The People's Bank of China (PBOC) may resume government bond purchases to combat rising short-term interest rates.
China's one-year bond yield rose over 20 basis points this month, reducing the gap with 10-year bonds.
The PBOC previously halted bond purchases in January to stabilize the yuan, creating tight liquidity.
Economists expect low inflation and weak credit demand to lead the PBOC towards an accommodative policy.
A flattening yield curve indicates bearish long-term growth expectations, pushing long-end yields below 1.6%.

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Story summary

The People's Bank of China (PBOC) may resume government bond purchases to combat rising short-term interest rates.
China's one-year bond yield rose over 20 basis points this month, reducing the gap with 10-year bonds.
The PBOC previously halted bond purchases in January to stabilize the yuan, creating tight liquidity.
Economists expect low inflation and weak credit demand to lead the PBOC towards an accommodative policy.
A flattening yield curve indicates bearish long-term growth expectations, pushing long-end yields below 1.6%.