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China’s central bank has reiterated its commitment to a “moderately loose” policy stance in 2026, pledging stronger countercyclical and cross-cycle adjustments and signalling flexible and efficient use of reserve requirement ratio (RRR) cuts and interest rate reductions to support a strong start to the 15th five-year plan.
At a work conference outlining priorities for the coming year, the People’s Bank of China also highlighted goals including a reasonable recovery in prices, mitigating financial risks in critical sectors, maintaining yuan stability and improving infrastructure for cross-border use of the currency.
“[We need to] enhance the forward-looking nature, targeting and coordination of macroeconomic policy,” the PBOC said in a readout issued after the two-day conference, which concluded on Tuesday.
“[We will] focus on expanding domestic demand and optimising supply, preventing and defusing risks and stabilising social expectations … to provide strong financial support for a good start to the 15th five-year plan.”
The central bank also pledged to keep the yuan “basically stable at a reasonable and balanced level” and guard against the risk of exchange-rate overshooting.
The yuan has strengthened in recent months, breaking through the psychologically important 7-per-US-dollar mark. Analysts at Goldman Sachs said in a note on Monday that while policymakers may signal preference for a stronger yuan, recent policy communications suggest “the central bank is keen to avoid too fast an appreciation”.
A commentary published on Wednesday in Financial News, an outlet affiliated with the central bank, highlighted uncertainty over the global inflation trajectory, shifts in monetary policy abroad and tension between strong supply and weak demand at home despite overall economic stability.
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