PBOC: To Continue Implementing Moderately Accommodative Monetary Policy, Further Improve Interest Rate Regulation Framework

The People's Bank of China (PBOC) released the 1Q26 China Monetary Policy Implementation Report, noting that changes in the external environment have deepened their impact. Global economic growth momentum remains weak, geopolitical risks continue to rise, supply shocks and imported inflationary pressures have emerged, major economies show divergent performance, and there is uncertainty over monetary policy adjustments by central banks worldwide. China's economy is advancing toward higher-quality development with new growth drivers and improvements, but the foundation for sustained stable recovery still needs to be further consolidated. At the same time, the supporting conditions and fundamental trend for China's long-term positive economic outlook remain unchanged. Institutional strengths and the advantages of a large economy continue to be demonstrated. Confidence should be strengthened, advantages fully leveraged, and various risks and challenges calmly addressed to enhance economic resilience and solidify the foundation for development.The PBOC will continue to implement a moderately accommodative monetary policy. It will enhance the forward-looking, flexible and targeted nature of policy, appropriately manage the intensity, pace and timing of policy implementation in accordance with domestic and external economic and financial conditions as well as financial market performance, strengthen coordination between monetary and fiscal policies, smooth the transmission mechanism of monetary policy, and promote stable economic growth and a reasonable rebound in prices. A range of monetary policy tools will be used flexibly to maintain ample liquidity and relatively accommodative social financing conditions, guide reasonable growth in aggregate financing and balanced credit supply, and ensure that the growth of Aggregate Financing to the Real Economy (Flow) and money supply matches economic growth and targeted overall price levels.In addition, the PBOC will further improve the interest rate regulation framework, strengthen the guidance role of the central bank's policy rates, refine the market-based interest rate formation and transmission mechanism, give full play to the self-regulatory mechanism for market-based interest rate pricing, enhance the implementation and supervision of interest rate policies, lower banks' funding costs, and guide financial institutions to improve their interest rate pricing capabilities, thereby promoting lower overall financing costs for the economy. Efforts to disclose and deepen work on corporate loan financing costs will continue. The PBOC will leverage both the aggregate and structural functions of monetary policy tools, make good use of various structural monetary policy instruments, optimize tool management, advance key financial initiatives, and strengthen financial support for priority areas such as expanding domestic demand, technological innovation, and small and micro enterprises.The PBOC will also adhere to a managed floating exchange rate regime based on market supply and demand, with reference to a basket of currencies. It will maintain exchange rate flexibility, allow the exchange rate to function as an automatic stabilizer for the macroeconomy and balance of payments, adopt comprehensive measures to enhance the resilience of the foreign exchange market, stabilize market expectations, guard against the risk of exchange rate overshooting, and keep the RMB exchange rate basically stable at a reasonable and equilibrium level. It will further expand and enrich the central bank's macroprudential and financial stability functions, improve the macroprudential and financial stability policy toolkit, safeguard the smooth operation of financial markets, and firmly prevent systemic financial risks.