PBOC pledges accommodative policy and counter-cyclical support
The People's Bank of China pledged to maintain an appropriately accommodative monetary policy and step up counter-cyclical adjustments during its 2026 semiannual work conference. Governor Pan Gongsheng outlined key priorities to expand domestic demand and manage financial risks.
Balancing liquidity and credit expansion
At end-June 2026, aggregate financing to the real economy and broad money supply (M2) grew by 7.4 percent and 8.0 percent year-on-year, while targeted loans for key areas grew 11 percent.
For the second half of 2026, the central bank plans to maintain an appropriately accommodative policy stance by employing liquidity instruments, including reverse repos, Medium-term Lending Facilities, and government bond trading.
The PBOC will keep liquidity adequate, guide financial institutions to supply credit more evenly, and lower comprehensive financing costs.
Additionally, the central bank intends to maintain exchange rate flexibility while keeping the RMB exchange rate basic stable at an adaptive and equilibrium level.
Defusing local debt and market volatility
The central bank emphasized ongoing efforts to resolve local government financing platform debt risks and facilitate their transition toward market-oriented operations.
Two specific monetary policy tools supporting capital markets will remain active to bolster confidence.
On financial opening-up, Panda bond issuance surpassed RMB 160 billion in the first half of the year.
Moving forward, the PBOC aims to enhance the Cross-Border Interbank Payment System, broaden e-CNY infrastructure, and consolidate Hong Kong's role as a global offshore RMB hub.
Targeted credit cannot replace structural reform
The PBOC's accommodative stance underscores persistent domestic headwinds.
Yet relying on targeted credit facilities risks masking underlying structural weaknesses.
Monetary easing alone cannot substitute for fundamental economic reforms.
Source: PBOC Holds 2026 Semiannual Work Conference
IN: