China's central bank vows moderately loose monetary policy in 2026

The People's Bank of China (PBOC) has emphasized the need to continue implementing a moderately loose monetary policy, as the central bank held its 2026 work conference from January 5 to 6.

The PBOC highlighted priorities such as promoting high-quality economic development and reasonable price recovery, and stressed flexible and efficient applications of various monetary policy tools, such as reserve requirement ratio cuts and interest rate cuts.

In 2026, the central bank will also make finance better serve the high-quality development of the real economy. It will improve the system of structural monetary policy tools, optimize the design and management, and strengthen financial support for key areas, such as expanding domestic demand, sci-tech innovation, and the development of micro, small and medium-sized enterprises.

Continually deepened financial reform and opening up were also mentioned. The PBOC will strengthen the supervision and management of the inter-bank bond market, foreign exchange market, bill market, gold market, etc. It also plans to optimize arrangements of the "Bond Connect" and "Swap Connect" mechanisms.