PBOC pledges accommodative policy, stable RMB amid global shifts
The People's Bank of China's Monetary Policy Committee held its second quarterly meeting of 2026 on July 4. The committee discussed economic and financial developments and outlined principles for future monetary policy.
Accommodative policy in volatile times
The People's Bank of China's Monetary Policy Committee (MPC) noted that macroeconomic policy has been more proactive this year, with monetary policy remaining moderately accommodative.
The PBOC has intensified counter-cyclical and inter-temporal adjustments, employing a diverse set of tools to foster a supportive financial environment for economic improvement.
The MPC acknowledged a complex and volatile external environment, characterized by faltering global growth, geopolitical frictions, and divergent economic performances among major economies.
Domestically, China's economy has shown overall stability and progress in high-quality development, yet it confronts challenges such as supply-demand imbalances, structural divergences, and external shocks.
The committee stressed the need to continue an appropriately accommodative monetary policy, enhancing coordination with fiscal policies to promote stable growth and a moderate recovery of price levels.
Refining the policy toolkit
The MPC outlined guiding principles for the next phase, emphasizing the synergy of existing and incremental policies to be more forward-looking, flexible, and targeted.
The PBOC will ensure adequate liquidity, aligning growth of aggregate financing and money supply with economic growth and price level targets.
It plans to strengthen the central bank's policy rate guidance, refine market-oriented interest rate mechanisms, and enhance supervision of interest rate policies.
Furthermore, the PBOC aims to reduce intermediary financing fees to maintain low social financing costs and will monitor the bond market from a macro-prudential perspective, paying close attention to long-term yields.
Stability over aggressive stimulus
The PBOC's continued emphasis on "appropriately accommodative" policy signals a cautious approach, prioritizing stability and structural adjustments over aggressive stimulus.
While acknowledging external volatility and domestic imbalances, the committee's focus on "high-quality development" reflects a commitment to long-term strategic goals.
This nuanced strategy aims to manage risks and direct capital through structural tools, rather than broad-based easing.