China’s 10-year government bond yield held steady near 1.88% on Friday, as a modest uptick in consumer inflation was insufficient to change expectations for an accommodative monetary policy stance. Headline CPI edged up to 0.8% year-on-year in December 2025, from 0.7% in November, marking the highest reading since February 2023. Despite the uptick, inflationary pressures remain broadly subdued. The average inflation rate for 2025 was flat, the weakest outcome since 2009 and well below the government’s target of around 2%. Meanwhile, producer prices fell 1.9% year-on-year, moderating from a 2.2% decline in November and slightly better than market forecasts of a 2% drop. Earlier this week, the People’s Bank of China reiterated its commitment to supporting economic growth, emphasizing its readiness to cut the reserve requirement ratio and reduce policy rates, supporting ample liquidity and persistently supportive financial conditions.
