Central Bank: Regulate credit market operations and reduce financing intermediary costs

◎Reporter Zhang Jones

The Monetary Policy Committee of the People’s Bank of China convened recently and the meeting of the first quarter of 2026 called for continuing to implement a moderately accommodative monetary policy, stepping up countercyclical and cross-cycle adjustments, better leveraging the dual role of monetary policy tools in both aggregate quantity and structural aspects, strengthening coordination and cooperation between monetary and fiscal policies, and promoting stable and sustained economic growth and a reasonable rebound in prices.

Regarding the current internal and external environment, the meeting believes that changes in the external environment are having a deeper impact, global economic momentum is weak, geopolitical conflicts and trade and economic conflicts occur frequently, and the economic performance of major economies has shown some divergence; there are uncertainties about the inflation outlook and adjustments to monetary policy. China’s economy is generally operating steadily, with progress while maintaining stability, and high-quality development has achieved new results; however, it still faces problems and challenges such as strong supply and weak demand and external shocks.

With a focus on the main thinking for monetary policy in the next phase, the meeting recommended that the integrated effectiveness of both incremental policies and existing stock policies be brought into play, that a comprehensive use of multiple tools be made to strengthen monetary policy regulation, and that the strength, pace, and timing of policy implementation be properly grasped in light of the domestic and external economic and financial situation and the operation of financial markets.

The meeting proposed that liquidity be kept abundant so that social financing scale and the growth of money supply are aligned with economic growth and the expected target for the overall price level.

With regard to interest rates, the meeting clarified: strengthen guidance from the central bank’s policy interest rates, improve the market-oriented interest rate formation and transmission mechanism, give full play to the role of market interest rate pricing self-discipline mechanisms, and strengthen the implementation and supervision of interest rate policies; standardize business conduct in the credit market, reduce financing intermediary fees, and promote social comprehensive financing costs to remain at low levels.

The meeting also required, from a macroprudential perspective, to observe and assess the operation of the bond market and to pay attention to changes in long-term yields.

Regarding the exchange rate, the meeting proposed that the resilience of the foreign exchange market be enhanced, market expectations be stabilized, and the yuan exchange rate be kept basically stable at a reasonable and balanced level.

The meeting pointed out that: efforts should be made to guide large banks to play the leading role in providing financial services to the real economy, to drive smaller and medium-sized banks to focus on their primary responsibilities and core businesses, and to enhance the banks’ capital strength; to make good use of various structural monetary policy tools, optimize tool management, and solidly carry out the work of “Five Major Articles” on finance, while strengthening financial support for key areas such as expanding domestic demand, scientific and technological innovation, and small and micro enterprises; to continuously improve financial services that support the growth and development of the private economy; and to maintain stable operation of financial markets.

The meeting believes that, since this year began, macro policies have become more proactive and effective; monetary policy has remained moderately accommodative; countercyclical and cross-cycle adjustments have been strengthened; and a comprehensive use of various monetary policy tools has created a suitable monetary and financial environment for the economy to continue trending toward improvement and optimization. The reform effectiveness of the loan prime rate (LPR) has continued to be released; the mechanism for market-oriented adjustments to deposit interest rates has been effectively brought into play; the efficiency of monetary policy transmission has increased; and social financing costs have remained at historically low levels. The supply and demand in the foreign exchange market is basically balanced; the yuan exchange rate floats both ways, and remains basically stable at a reasonable and balanced level. Financial markets overall are operating steadily.

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