The reported guidance suggests the PBOC is trying to keep targeted easing from pushing short-term funding costs too low as it calibrates support for priority sectors.
China’s central bank has reportedly told select banks to stop rediscounting commercial bills below a 0.5% interest rate, signaling a floor for part of the short-term funding market even as policymakers continue an easing cycle. Rediscounting allows banks to sell commercial paper and bank acceptances to the central bank at a discount to obtain liquidity, making it a targeted tool for steering credit conditions. The reported move indicates the People’s Bank of China is trying to prevent ultra-cheap funding from overshooting while still directing support to priority areas. The PBOC had already cut the one-year relending rate to 1.25% from 1.5% on Jan. 19, 2026, in a bid to channel cheaper credit to small and medium-sized enterprises and agriculture, suggesting the rediscount floor is being used alongside broader easing rather than instead of it.