China's central bank is planning to implement significant interest rate cuts in order to boost economic growth and combat deflation.

Wall Street banks, such as Goldman Sachs and Morgan Stanley, predict that the People's Bank of China's main policy rate could be reduced by up to 40 basis points in 2025, potentially bringing the seven-day reverse repo rate down to 1.1%. This would be the largest annual decrease since 2015. However, analysts warn that the impact of these monetary policy measures may be limited due to persistently low demand for credit and the ongoing slump in the property market.

Despite these challenges, the central bank's chief, Pan Gongsheng, has expressed a commitment to supporting the economy. China is currently facing its longest period of deflation this century, which has kept borrowing costs high even as rates are lowered. The potential re-election of Donald Trump as US President raises concerns about the possibility of a renewed trade war, which could further complicate China's efforts to recover economically.