The People's Bank of China convened its 2026 second-half work conference on August 1, pledging to continue a moderately loose monetary policy and vowing to formulate "practical and effective incremental policies" to support the economy's sustained recovery.
Key Policy Stance
Governor Pan Gongsheng chaired the meeting, which reviewed H1 work and deployed priorities for the remainder of the year. The central bank emphasized maintaining ample liquidity, guiding financial institutions to enhance the balance of credit expansion, and keeping social financing and money supply growth aligned with economic growth and price targets.
The PBOC said it will comprehensively utilize and adjust monetary policy tools including reverse repos, medium-term lending facility operations, and treasury bond trading to provide short-, medium-, and long-term liquidity. It also pledged to improve short-end rate control mechanisms and narrow the temporary overnight reverse repo operation rate corridor.
Incremental Policies Ahead
"We must fully leverage the effectiveness of existing policies and promptly plan practical incremental policies, increasing counter-cyclical adjustment intensity," the statement said. Market analysts widely interpret this as paving the way for potential reserve requirement ratio cuts and interest rate reductions in the second half.
The meeting also emphasized maintaining RMB exchange rate stability at a reasonable equilibrium level, improving the quality of financial services for the real economy, and steadily advancing financial reform and high-level opening-up.
Market Expectations
Economists surveyed by Chinese media expect that RRR cuts and policy rate reductions remain possible in the coming months, particularly to support infrastructure investment and consumption during the third-quarter construction season.