People's Bank of China sets 2025 agenda with a moderately accommodative stance and scope for reserve requirement and rate cuts

The People's Bank of China published the conclusions of its annual work conference, setting out 2025 priorities centred on implementing a “moderately accommodative” monetary policy, strengthening macroprudential and financial stability functions, and advancing financial reform, opening-up and renminbi internationalisation. The central bank signalled it will adjust policy tools as conditions warrant, including potential cuts to reserve requirements and interest rates, while seeking to maintain ample liquidity and basic stability of the renminbi exchange rate. As context, the conference reviewed 2024 actions including two reserve requirement ratio cuts, two policy rate cuts, further work on the monetary policy framework and the loan prime rate mechanism, and new tools to support capital market stability, namely a swap facility for securities, fund and insurance companies and a relending facility for share buybacks and shareholding increases. For 2025, priorities include aligning growth in total social financing and money supply with economic growth and expected price objectives, preventing excessive exchange rate moves, enhancing the top-level framework, statistics and assessment arrangements for the “five key areas” of financial work, and optimising structural monetary policy tools with greater support for technology innovation and consumption. Financial stability work will focus on strengthening the macroprudential framework and toolset, improving market risk monitoring and response mechanisms, supporting market-based and law-based resolution of small and medium-sized bank risks, continuing work on local government financing vehicle debt risk mitigation, and strengthening real estate financial macroprudential management, while using the two capital market tools more fully and exploring a more regularised institutional arrangement. The agenda also covers bond market development, stronger oversight of financial infrastructure, orderly high-level financial opening, measures to support Shanghai and reinforce Hong Kong as international financial centres, further steps on renminbi internationalisation (including use of swap lines and renminbi clearing banks), and continued work on payments, credit reporting markets, digital renminbi research and application, and anti-money laundering-related tasks.