Study on the Practical Impact of the Current Interest Rate Policy on Household Well-being

Yibo Tang

doi:10.54097/79bdck70

Authors

Yibo Tang

DOI:

https://doi.org/10.54097/79bdck70

Keywords:

Interest rate policy, Loan Prime Rate (LPR), Household livelihood, Savings and wealth management, Consumer credit

Abstract

This paper examines China’s interest rate policy adjustments since 2025, and uses official data from the People’s Bank of China and the National Bureau of Statistics, as well as practical situations related to people's livelihoods, to analyze the actual impact of interest rate adjustments on residents’ daily economic life. This study finds that the latest round of interest rate cuts and LPR reductions have effectively reduced the cost of housing credit for residents, significantly easing the burden of monthly household mortgage payments. At the same time, the continuous decline in deposit interest rates has caused a drop in residents' savings income, which has significantly guided their financial management behavior. While policies have boosted consumption and reduced social financing costs, they have also had uneven impacts on different income groups, with the elderly and low-income families being more affected by the decline in savings income. This study holds that households should optimize their asset allocation to adapt to the low-interest-rate environment. The policy makers should also be more balanced in terms of regulatory objectives and the security of livelihood, reduce the level of unequal wealth caused by the policy using different supportive actions, and realize the concerted development of economic stability as well as increased standard of living among the population.

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