SHANGHAI: China’s 10-year treasury yield fell below the key 2% level on Monday, marking its weakest point in 22 years after authorities moved to guide deposit rates lower, reinforcing the view there will be more monetary policy easing to help the struggling economy.

A body overseen by the People’s Bank of China said on Friday that banks are banned from offering preferential deposit rates for select clients.

The 10-year benchmark yield dipped 2.7 basis points to 1.998% in late morning trade, touching its lowest point since April 2002.

“It’s quite significant as 2% is a psychologically important level,” said Wang Hongfei, a bond trader.

The PBOC has sought to bring deposit rates offered by banks to non-bank financial institutions such as brokerages and fund companies to be in line with policy rates.

The policy pushes down short-term rates, and could “become a new driver for the downward trend in long-term bond yields,” Yang Yewei, an analyst at Guoshen Securities, said in a note.

China’s 10-year treasury futures, which move inversely to yields, jumped 0.4% on Monday to flirt with record highs and analysts say the trend could continue.

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“Looking ahead, we expect the PBOC to intensify monetary easing in 2025, which will further support the bond market,” said Wei Li, head of Multi-Asset Investments, China, BNP Paribas.

“We anticipate that the PBOC’s dovish monetary stance will put downward pressure on long-term yields.”

Chen Jianheng, an analyst at China International Capital Corp, said in a recent webinar that loose monetary policy would reduce interbank deposit rates and help push down 10-year yields to around 1.7-1.9% next year.