The People's Bank of China Monetary Policy Committee, at its second-quarter 2026 meeting, signaled that monetary policy will remain moderately loose and that countercyclical and cross-cyclical adjustment should be stepped up. The committee said policy should better combine aggregate and structural tools, work more closely with fiscal policy, and support stable economic growth alongside a reasonable rebound in prices. Its assessment was that China's economy has remained broadly stable and is improving in quality, but still faces weak demand relative to supply, structural divergence and external shocks amid a more complex global backdrop. For the next stage, the committee called for ample liquidity and for growth in social financing and the money supply to match economic growth and price-level objectives. It also called for stronger guidance through the central bank's policy rates, further improvements in market-based interest rate formation and transmission, tighter execution and supervision of interest rate policy, and lower financing intermediation costs to keep overall financing costs low. In financial markets, it said bond market developments should be observed and assessed from a macroprudential perspective, with attention to changes in long-term yields, while foreign exchange policy should focus on strengthening market resilience, stabilizing expectations and keeping the renminbi basically stable at a reasonable and balanced level. The committee also said large banks should play a leading role in serving the real economy, while small and medium-sized banks should focus on their core business and strengthen capital. It called for continued use and optimization of structural monetary policy tools to support domestic demand, technological innovation, small and micro enterprises and the private sector, while maintaining stable financial market operations and advancing high-level two-way financial opening alongside stronger risk management.
Central Bank of the Republic of China2026-07-08
People's Bank of China Monetary Policy Committee reiterates moderately loose policy stance and calls for stronger countercyclical adjustment
The People's Bank of China Monetary Policy Committee said it will continue a moderately loose monetary policy stance and increase countercyclical and cross-cyclical adjustment. Priorities include ample liquidity, stronger policy rate transmission, lower financing costs, monitoring long-term bond yields and keeping the renminbi basically stable. It also called for targeted support for domestic demand, innovation, small businesses and the private sector.