The People's Bank of China released its Monetary Policy Execution Report for the first quarter of 2026. The report indicates that the national economy achieved a strong start this quarter, with a moderate recovery in the macroeconomy. In the next phase, the central bank will implement a prudent and moderately accommodative monetary policy with precision and effectiveness, leveraging the combined effects of existing and new policies to expand domestic demand, optimize supply, and resolutely guard against systemic financial risks.
The report reviews the performance of the macroeconomy and financial markets in the first quarter. Data show that first-quarter GDP grew by 5.0% year-on-year, with steady increases in domestic consumption and fixed-asset investment, and continued optimization of import-export trade structures. Price indicators showed marginal improvement, with the Consumer Price Index rising 0.8% year-on-year in the first quarter. The Producer Price Index achieved its first year-on-year increase in March after 41 consecutive months of decline. In terms of financial aggregates, the broad money supply and outstanding social financing grew by 8.5% and 7.9% year-on-year respectively by the end of March, indicating generally accommodative social financing conditions. Meanwhile, financing costs for the real economy remained at historically low levels, with the weighted average interest rate for newly issued corporate loans in March at approximately 3.1%. The RMB exchange rate fluctuated in both directions, appreciated against a basket of currencies, and maintained basic stability at a reasonable and balanced level.
Regarding first-quarter operational approaches, the report notes that the central bank utilized a combination of tools, including reverse repos, Medium-term Lending Facilities, and government bond transactions, to increase the supply of medium- to long-term funds, ensuring ample liquidity in the banking system. The targeted role of structural monetary policy was significantly enhanced, with the central bank lowering relevant policy tool rates by 0.25 percentage points. Measures such as merging quotas for agricultural and small business relending and rediscounting, establishing a separate 1 trillion yuan relending facility for private enterprises, and increasing the relending quota for technological innovation and transformation by 400 billion yuan provided precise support to the real economy. By the end of the first quarter, loan growth in key areas such as technology, green initiatives, inclusive finance, elderly care, and the digital economy maintained double-digit growth. Additionally, the macroprudential management system continued to improve, with the central bank completing the 2025 assessment of systemically important financial institutions and implementing relending for stock repurchases and buybacks to maintain stable capital market operations.
For the next phase of monetary policy direction, the report emphasizes a balanced focus on aggregate and structural measures, maintaining reasonably ample liquidity to align the growth of social financing scale and money supply with economic growth and price level targets. The central bank reiterated its commitment to further improving relevant mechanisms to advance the "five major areas" of finance: technology, green initiatives, inclusive finance, elderly care, and the digital economy.
In terms of transmission mechanisms and risk prevention, the report states that efforts will continue to deepen interest rate marketization reforms, promote transparency in corporate loan financing costs, and maintain low overall social financing costs. At the same time, the managed floating exchange rate system will be upheld to prevent exchange rate overshooting risks and maintain resilience in the foreign exchange market. The central bank emphasized that it will accelerate the development of a comprehensive macroprudential management system, steadily advance the resolution of financial risks in key institutions and regions, and resolutely prevent and mitigate financial risks.
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