The People's Bank of China (PBOC), the country's central bank, will continue to implement a moderately loose monetary policy in 2026, and utilize tools such as reserve requirement ratio (RRR) cuts and interest rate reductions to ensure liquidity remains sufficient, according to its governor Pan Gongsheng.
Monetary policy will focus on promoting stable economic growth and reasonable price recovery, with the use of both incremental and existing policies to create a favorable monetary and financial environment for the high-quality development and stable operations of financial markets, said Pan.
"We will carefully calibrate the intensity, pace, and timing of policy implementation, and make flexible and efficient use of monetary policy instruments such as RRR cuts and interest rate reductions to maintain adequate liquidity. This will ensure that increases in aggregate financing and money supply are in step with projected economic growth and Consumer Price Index levels. There remains room for RRR and interest rate cuts this year. The PBOC will also strengthen the implementation and supervision of interest rate policies to keep overall financing costs low," said Pan.
For 2026, financial institutions will be guided to enhance support for key areas, including expanding domestic demand, advancing technological innovation, and assisting micro, small, and medium-sized enterprises, he said.
"Efforts will be made to improve consumer finance services, further facilitate payment service, and effectively implement the one-off credit repair policy to improve the consumer finance environment. We will also support eligible financial institutions in issuing financial bonds to boost funding supply in the consumption sector," said Pan.
In addition, policy backing will be further strengthened for technological innovation, said Pan.
The relending quota for sci-tech innovation and technological upgrades will be raised from 800 billion yuan (about 114.81 billion U.S. dollars) to 1.2 trillion yuan, with the scope extended to include small and medium-sized private enterprises (SMEs) with higher levels of research and development investment.
"The relending and rediscounting quota targeting agriculture and small businesses will be increased by 500 billion yuan, bringing the total to 4.35 trillion yuan. Meanwhile, a dedicated relending facility of 1 trillion yuan will be established specifically for private enterprises, prioritizing support for private SMEs. Financial institutions will also be supported in issuing financial bonds for micro and small enterprises, and the credit enhancement system for private SMEs will be improved," he said.
China's central bank signals further RRR, interest rate cuts to bolster growth
China's central bank signals further RRR, interest rate cuts to bolster growth
