China’s central bank lowered its one-year lending rate to banks to the lowest level on record in order to reduce financing costs and support economic growth. According to informed sources, the People’s Bank of China, PBOC, reduced the medium-term lending facility, MLF, rate to 1.5 percent in January, down from 1.55 percent in December. The central bank has not changed its policy rate since May 2025 and has opted for a gradual and low-profile approach rather than shock measures to support a fragile economy. This rate cut comes as China’s economy faces deflationary pressures and a prolonged downturn in the property sector.

U.S. manufacturing activity expanded in January 2026 at its fastest pace since 2022. The Institute for Supply Management, ISM, manufacturing index rose to 52.6, indicating growth in new orders and higher production. This expansion followed nearly a year of contraction in the sector. Input prices increased and demand remained strong. The employment index also improved, although employment remains in contractionary territory. However, concerns persist regarding the impact of trade tariffs and high input costs on the sustainability of this trend.

New Zealand’s labor market showed signs of momentum in the final quarter of the year, but despite this, the unemployment rate rose to 5.4 percent, marking the highest level in a decade. The increase in unemployment occurred despite strong job growth, as the labor force participation rate rose to 70.5 percent. These data were in line with central bank expectations, and markets are pricing in an interest rate hike toward late 2026.

Thomas Barkin, President of the Federal Reserve Bank of Richmond, said last year’s interest rate cuts helped support the labor market. He emphasized that bringing inflation back to the 2 percent target will require further effort. Barkin noted that while economic trends remain positive, job growth is concentrated in a few sectors and inflation remains above the central bank’s target.