China's Central Bank Cuts PSL Rate by 0.25 Percentage Points to 1.5%
nashnova research
The People's Bank of China cut the one-year PSL rate from 1.75% to 1.5%, a 25-basis-point reduction — giving policy banks cheaper funding and lowering the cost of capital flowing into infrastructure and national-strategy projects.
What exactly was cut?
The PBOC lowered the Pledged Supplementary Lending (PSL) rate by 25 basis points, bringing the one-year rate from 1.75% to 1.5%.
The target is specific: reduce the funding cost for China's policy banks.
In plain terms = when the central bank lends to China Development Bank or Agricultural Development Bank, it now charges less interest.
What is PSL and why does it matter?
PSL — Pledged Supplementary Lending — is the PBOC's tool for channeling medium- and long-term funds to policy banks. The money does not flow into the open market; it is directed at national-strategy projects.
Historically, PSL funds have gone to shantytown redevelopment, major water-conservation projects, and underground utility corridors.
This means → a lower PSL rate reduces financing costs for these sectors, easing funding pressure on project rollouts.
What signal does this send?
The PBOC stated explicitly: the cut aims to "better incentivize policy banks to support the real economy and serve national strategy."
In the current economic environment, this is another step in continued monetary easing — directing funds toward the real economy rather than financial circulation.
This reflects a policy preference for targeted, structural liquidity tools over broad-based rate cuts alone.
市场有风险，内容仅供研究参考，不构成投资建议。