Maintaining a Prudent and Accommodative Policy Stance

The latest authoritative report outlines that monetary policy will continue on a moderately accommodative path. Policymakers stress the need to enhance foresight, flexibility, and precision, closely monitoring domestic and international economic conditions and financial market developments to calibrate the timing and intensity of measures. Strengthening coordination between monetary and fiscal policies is emphasized to improve transmission mechanisms, fostering stable economic growth and a moderate recovery in price levels.

Optimizing Financial Conditions Through Multiple Channels

The report indicates a flexible use of various monetary policy tools to maintain ample liquidity in the financial system and generally accommodative financing conditions. The objective is to guide appropriate growth in aggregate financing and balanced credit expansion, ensuring alignment with economic growth and inflation targets. Regarding interest rate mechanisms, efforts will focus on:

  • Refining the interest rate framework and strengthening the guiding role of policy rates;
  • Improving the market-based formation and transmission of interest rates;
  • Helping financial institutions enhance pricing capabilities to keep overall financing costs low.

Strengthening Targeted Support and Risk Prevention

Policy will leverage both aggregate and structural functions. By optimizing and utilizing various structural tools, the focus will be on key areas of financial support for the real economy, particularly boosting domestic demand, technological innovation, and small and medium-sized enterprises. On the exchange rate front, the managed floating regime based on market supply and demand with reference to a basket of currencies will be maintained. Exchange rate flexibility will be preserved to serve as an automatic stabilizer, while measures will be taken to bolster foreign exchange market resilience, stabilize expectations, prevent overshooting risks, and keep the RMB exchange rate fundamentally stable at an adaptive and equilibrium level.

Furthermore, the report explicitly calls for expanding the macroprudential and financial stability toolkit to safeguard smooth market functioning and resolutely prevent systemic financial risks.