On July 8th, the People's Bank of China announced that it will continue to implement a moderately loose monetary policy, increase countercyclical and cross cyclical adjustment efforts, better leverage the dual functions of monetary policy tools in terms of quantity and structure, strengthen the coordination of monetary and fiscal policies, promote stable economic growth and reasonable price recovery.
The Monetary Policy Committee of the People's Bank of China recently held its Q2 2026 meeting to study the main ideas for the next stage of monetary policy. The meeting proposed to leverage the integrated effect of incremental policies and stock policies, enhance policy foresight, flexibility, and targeting, and grasp the intensity, pace, and timing of policy implementation according to the domestic and international economic and financial situation and financial market operation.
The meeting also proposed to strengthen the guidance of central bank policy interest rates, improve the transmission mechanism of market-oriented interest rate formation, give full play to the role of market interest rate pricing self-discipline mechanism, and strengthen the implementation and supervision of interest rate policies. Standardize the operation of the credit market, reduce intermediate financing costs, and promote the low operation of comprehensive social financing costs. Observe and evaluate the operation of the bond market from a macro prudential perspective, and pay attention to changes in long-term returns. Smooth the transmission mechanism of monetary policy and improve the efficiency of fund utilization. Enhance the resilience of the foreign exchange market, stabilize market expectations, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
The meeting also studied the direction of policy implementation. The meeting pointed out that we should make good use of various structural monetary policy tools, optimize tool management, solidly carry out the "five major articles" of finance, and strengthen financial support for key areas such as expanding domestic demand, technological innovation, and small and medium-sized enterprises. Continuously providing financial services to support the development and growth of the private economy. Maintain the stable operation of financial markets. Efforts should be made to promote high-level two-way opening up of finance, and improve the economic and financial management capabilities and risk prevention and control capabilities under open conditions.
In addition, the meeting also proposed to coordinate the relationship between total supply and total demand, focus on expanding domestic demand, optimizing supply, optimizing increment, revitalizing stock, enhancing the endogenous driving force of economic development, further strengthening the domestic circulation, optimizing the domestic and international dual circulation, and continuously consolidating and expanding the stable and positive momentum of the economy.