Central Bank Releases Monetary Policy Implementation Report for the Second Quarter of 2026: Moderate Easing Continues to Boost the Quality and Efficiency Improvement of Financial Service Entities

The Zhitong Finance App learned that the central bank released China's monetary policy implementation report for the second quarter of 2026 and continues to implement a moderately loose monetary policy. Enhance the forward-looking, flexible and pertinent nature of policies, grasp the intensity, pace and timing of policy implementation in accordance with domestic and foreign economic and financial situations and financial market operations, strengthen coordination with fiscal policies, and support steady economic growth, high-quality development, and the smooth operation of financial markets. Comprehensively apply and adjust monetary policy tools in a timely manner to maintain sufficient liquidity and relatively relaxed social financing conditions, and guide the growth of social financing scale and money supply to match the expected goals of economic growth and overall price levels. Promote the reform and improvement of the monetary policy operating framework in a smooth and orderly manner, and better guide short-term interest rates in the money market to run smoothly around policy interest rates.

The original text is as follows:

China Monetary Policy Implementation Report for the Second Quarter of 2026

Summary of contents

Since this year, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at the core, China's economy has shown a development trend of new momentum and improved structure. The gross domestic product (GDP) grew 4.7% year over year in the first half of the year. The People's Bank of China adheres to Xi Jinping's ideology of socialism with Chinese characteristics in the new era, resolutely implements the decisions and arrangements of the Party Central Committee and the State Council, continues to implement a moderately loose monetary policy, gives full play to the integrated effects of stock policy and incremental policy, and creates an appropriate monetary and financial environment to consolidate the steady, moderate and positive economic trend.

The first is to maintain sufficient liquidity in the banking system and increase the total amount of finance reasonably. Comprehensive use of various monetary policy tools such as reverse repurchases, medium-term loan facilitation, and treasury bond trading operations to maintain abundant liquidity. Improve the short-term interest rate regulation mechanism, increase the variety of overnight reverse repurchase operations in open market operations, and narrow the range of temporary positive and reverse repurchase operations from 70 basis points to 50 basis points to enhance the accuracy and effectiveness of interest rate control in the money market. Create repurchase tools for overseas central banks to facilitate RMB liquidity management and RMB bond asset allocation for overseas central banks. Guide financial institutions to invest their credit in a balanced manner, and strongly support the real economy's need for effective credit. The second is to promote the operation of comprehensive social financing at a low cost. Reduce interest rates on structured monetary policy instruments by 0.25 percentage points, continue to promote efforts to clarify comprehensive financing costs for corporate loans, and reduce intermediate financing costs. Make better use of the self-regulatory mechanism for market interest rate pricing, maintain a fair competitive order in the market, and enhance banks' ability to independently and rationally price. The third is to encourage and guide financial institutions to increase their support for key areas. Introduce and implement a series of structural monetary policy measures, expand the scale of tools and support, improve policy elements, combine the use of small reloans and rediscount lines to support agriculture, increase small reloans for agricultural support and reloan amounts for scientific and technological innovation and technological innovation and technological transformation, set up a separate 1 trillion yuan private enterprise reloan, and jointly establish risk sharing tools for scientific and technological innovation and private enterprise bonds to further help the transformation and optimization of the economic structure. Actively and steadily implement a one-time credit repair policy to support eligible overdue people to efficiently and easily reshape their credit. Fourth, keep the exchange rate basically stable. Insist that market supply and demand play a decisive role in exchange rate formation, give full play to the adjustment function of the exchange rate on the macroeconomy and balance of payments, and adopt comprehensive measures to maintain the basic stability of the RMB exchange rate at a reasonable equilibrium level. Encourage financial institutions to improve the level of exchange rate safe-haven services. Develop offshore RMB foreign exchange transactions in the Shanghai Free Trade Zone to promote the integration of onshore and offshore RMB markets. Fifth, promote risk management in key areas in a steady and orderly manner. Steadily promote financial risk management in key institutions and key regions. The interbank market data report library was officially listed to enhance the ability to penetrate and monitor the financial market.

The effects of a moderately loose monetary policy continue to show, social financing conditions are relatively relaxed, and the quality and efficiency of financial services in the real economy continues to improve. Total financial volume maintained reasonable growth. At the end of June, the stock of large-scale social financing and the broad money supply (M2) increased by 7.4% and 8.0%, respectively, over the same period last year. The banking system has abundant liquidity, and the average overnight interest rate of the money market DR001 for the first 6 months was 1.31%, and the overall operation was stable. The cost of comprehensive social financing was low. The interest rate for newly issued corporate loans in June was about 3.0%, about 20 basis points lower than the same period last year; the interest rate for newly issued personal housing loans was about 3.1%, which is basically the same as the same period last year. Investment in credit funds continued to be optimized. At the end of June, technology loans, green loans, inclusive loans, pension industry loans, and digital economy industry loans increased by 12.6%, 14.5%, 7.8%, 23.5%, and 15.1%, respectively, and continued to be higher than the overall loan growth rate. Supply and demand in the foreign exchange market are basically stable, and the RMB exchange rate remains basically stable at a reasonable equilibrium level. At the end of June, the RMB exchange rate against the US dollar closed at 6.7852 yuan, up 3% from the end of the previous year. The China Foreign Exchange Trading Center (CFETS) RMB Exchange Rate Index was 102.59, up 4.7% from the end of the previous year.

Currently, the external environment is more complex and changing. The momentum of world economic growth is weak, geographical conflicts and economic and trade frictions are frequent, supply shocks and the impact of imported inflationary pressure continue, the level of global inflation has risen, and the monetary policy trends of the central banks of major economies have adjusted. China's high-quality economic development has achieved new results. The momentum continues to increase, internal support for long-term economic improvement is more solid, and the advantages of institutions and major powers continue to be demonstrated. We must have firm confidence, maintain strategic strength for high-quality development, and effectively consolidate and expand the steady, moderate and positive trend of economic expansion. In the next stage, the People's Bank of China will adhere to Xi Jinping's ideology of socialism with Chinese characteristics in the new era, fully implement the spirit of the Fourth Plenary Session of the 20th CPC Central Committee, the Central Economic Work Conference, and the national “two sessions”, firmly grasp the top tasks of high-quality development, solidly promote Chinese-style modernization, adhere to the general tone of steady progress, fully implement the new development concept, give full play to the effectiveness of various existing policies, plan and introduce pragmatic and practical incremental policies in a timely manner, increase countercyclical adjustment efforts, increase efforts to expand domestic demand, optimize supply, and continue to move the economy towards new advantages development. Unswervingly follow the path of financial development with Chinese characteristics, further deepen financial reform and high-level opening-up to the outside world, speed up the construction of a strong financial country, improve the central banking system, establish a scientific and steady monetary policy system and a comprehensive macroprudential management system, and smooth the transmission mechanism of monetary policy.

Continue to implement a moderately loose monetary policy. Enhance the forward-looking, flexible and pertinent nature of policies, grasp the intensity, pace and timing of policy implementation in accordance with domestic and foreign economic and financial situations and financial market operations, strengthen coordination with fiscal policies, and support steady economic growth, high-quality development, and the smooth operation of financial markets. Comprehensively apply and adjust monetary policy tools in a timely manner to maintain sufficient liquidity and relatively relaxed social financing conditions, and guide the growth of social financing scale and money supply to match the expected goals of economic growth and overall price levels. Promote the reform and improvement of the monetary policy operating framework in a smooth and orderly manner, and better guide short-term interest rates in the money market to run smoothly around policy interest rates. Give full play to the role of a self-regulatory mechanism for market interest rate pricing, strengthen the implementation and supervision of interest rate policies, promote diversification of loan pricing benchmarks, guide financial institutions to improve interest rate pricing capabilities, continue to deepen efforts to clarify comprehensive financing costs for corporate loans, reduce intermediate financing costs, and promote the operation of comprehensive social financing costs at a low level. Give full play to the dual functions of the total volume and structure of monetary policy instruments, implement a series of monetary and financial policies introduced at the beginning of the year, continuously improve the design and management of tools, do a solid job in the “Five Major Articles” on finance, and strengthen financial support in key areas such as expanding domestic demand, scientific and technological innovation, and micro, small and medium-sized enterprises. Adhere to a managed floating exchange rate system based on market supply and demand, adjusted with reference to a basket of currencies, maintain exchange rate flexibility, use the macroeconomic and balance of payments automatic stabilizer functions for exchange rate regulation, adopt comprehensive measures to enhance the resilience of the foreign exchange market, stabilize market expectations, prevent the risk of exchange rate overadjustment, and maintain the basic stability of the RMB exchange rate at a reasonable equilibrium level. Expand and enrich the macroprudential and financial stability functions of the central bank, innovate financial instruments, maintain the smooth operation of the financial market, and firmly adhere to the bottom line that systemic financial risks do not occur.

This article was selected from the official website of the “People's Bank of China”. Zhitong Finance Editor: Chen Siyu.