People's Bank of China to Maintain Accommodative Monetary Policy, Strengthen Financial Support for Domestic Demand and Technology

The People's Bank of China has announced its intention to maintain an accommodative monetary policy stance in response to economic slowdown and external shocks.

Yonhap News Agency

On July 8, the People's Bank of China released the results of its regular meeting of the Monetary Policy Committee for the second quarter of 2026, held on July 4, stating, "We will continue to implement an appropriately accommodative monetary policy and strengthen counter-cyclical adjustments and cross-cycle regulation."

The central bank assessed that, so far this year, macroeconomic policies have been managed more proactively, and the monetary policy stance has remained appropriately accommodative. It explained that it has created a monetary and financial environment conducive to the continued improvement of the economy by utilizing a variety of monetary policy tools.

The bank noted that the reform of the Loan Prime Rate (LPR) continues to yield positive effects, and the market-based adjustment mechanism for deposit rates is also functioning effectively. The efficiency of monetary policy transmission has improved, and the overall cost of financing across society remains at a historically low level.

However, the People's Bank of China expressed caution regarding both domestic and external conditions. It diagnosed that the external environment is becoming increasingly complex, and the growth momentum of the global economy is weakening. The bank pointed out that geopolitical conflicts and frequent economic and trade frictions persist, and the economic cycles of major economies are diverging. It also highlighted uncertainties regarding inflation trends and the adjustment of monetary policies.

As for the Chinese economy, the central bank assessed that it is generally operating in a stable manner and that new achievements have been made in high-quality development. However, it explained that challenges and problems remain, including strong supply but weak demand, structural differentiation, and external shocks.

Regarding the next steps for monetary policy, the People's Bank of China stated that it will maintain ample liquidity and ensure that the growth of aggregate financing and money supply aligns with economic growth and inflation targets. It also pledged to strengthen the guiding role of central bank policy rates and to improve market-based interest rate formation and transmission mechanisms.

With regard to the yuan exchange rate, the central bank plans to enhance the resilience of the foreign exchange market, stabilize market expectations, and maintain basic stability at a reasonable and balanced level.

Financial support for key sectors will also be strengthened. The People's Bank of China said it would encourage large banks to serve as the mainstay in providing financial services to the real economy, while guiding small and medium-sized banks to focus on their core work. It also explained that it will use structural monetary policy tools to strengthen financial support for key areas such as expanding domestic demand, technological innovation, and support for small and micro businesses.

This content was produced with the assistance of AI translation services.