Source: Central Bank Official Website.

The People’s Bank of China’s Monetary Policy Committee held its first quarter (the 108th session) meeting on March 18, 2025.

The meeting noted that since the beginning of this year, macroeconomic regulation and control have intensified, monetary policy has been moderately relaxed, counter-cyclical adjustments have been strengthened, various monetary policy tools have been used comprehensively to serve the high-quality development of the real economy, creating a suitable monetary and financial environment for the sustained recovery of the economy. The reform of the loan market quote interest rate has shown significant results, and the market-oriented adjustment mechanism for deposit rates has been effectively utilized, enhancing the transmission efficiency of monetary policy, with social financing costs at historically low levels. The supply and demand in the Forex market are basically balanced, the current account surplus remains stable, Forex reserves are sufficient, the RMB exchange rate exhibits two-way fluctuations with expectations stabilizing, and it remains basically stable at a reasonable and balanced level. The overall operation of the financial market is stable.

The meeting analyzed the domestic and international economic and financial situation, stating that the current external environment is becoming more complex and severe, the momentum for world economic growth is weak, performances of major economies have shown differentiation, and uncertainty in inflation trends and monetary policy adjustments is rising. China’s economy is generally operating steadily with progress, and high-quality development is being steadily promoted; however, challenges remain, including insufficient domestic demand and numerous risk hazards. It is necessary to implement moderately relaxed monetary policies, strengthen counter-cyclical adjustments, better leverage the dual functions of monetary policy tools at both aggregate and structural levels, enhance coordination between monetary and fiscal policies, and maintain stable economic growth alongside reasonable price levels.

The meeting discussed the main ideas for the next stage of monetary policy, suggesting increasing the intensity of monetary policy regulation, enhancing the foresight, targeting, and effectiveness of monetary policy regulation, and adjusting the reserve requirement and interest rates as appropriate based on the domestic and international economic financial situation and financial market operations. It aims to maintain adequate liquidity, guide financial institutions to increase monetary credit efforts, aligning the scale of social financing and monetary supply growth with economic growth and overall price expectations. Strengthen the guidance of central bank policy interest rates, improve the market-oriented interest rate formation and transmission mechanism, utilize the self-discipline mechanism of market interest rate pricing, and enhance the execution and supervision of interest rate policies. Promote a decrease in the comprehensive cost of social financing. From a macro-prudential perspective, observe and assess bond market operations, and pay attention to changes in long-term yields. Smooth the transmission mechanism of monetary policy, improve fund utilization efficiency, and prevent capital idle turnover. Enhance the resilience of the Forex market, stabilize market expectations, strengthen market management, resolutely correct pro-cyclical behaviors in the market, effectively deal with actions that disrupt market order, prevent excessive adjustments in exchange rates, and maintain the RMB exchange rate's basic stability at a reasonable and balanced level.

The meeting discussed related work on deepening the structural reform of the financial supply side, pointing out the need to guide large banks to play a leading role in serving the real economy, promote small and medium-sized banks to focus on their main responsibilities and businesses, support banks to replenish capital, and jointly maintain the stable development of the financial market. Effectively implement various structural monetary policy tools that are in place, work on the financial “five major articles,” and continue to enhance support for significant strategies, key areas, and weak links. Optimize the relending policies for technological innovation and technical transformation, and study the establishment of new structural monetary policy tools, focusing on supporting investment and financing in the field of technological innovation, promoting consumption, and stabilizing foreign trade. Make good use of the swap facilities of securities, funds, and insurance companies, as well as the share buyback and reinvestment loans, and explore normalized institutional arrangements to maintain capital market stability. Continue to provide robust financial services to support the development of the private economy, fully leverage the coordination mechanism for supporting the financing of small and micro enterprises, and further eliminate bottlenecks affecting financing for small and medium enterprises. Focus on ensuring that policies issued in the financial sector are effectively implemented on the ground, enhance efforts to activate existing commodity housing and land, promote the stabilization of the real estate market,完善房地产金融基础性制度，助力构建房地产发展新模式. Implement financial policy measures to promote the healthy development of the platform economy. Effectively advance high-level two-way opening of the financial sector, improving economic financial management abilities and risk prevention capabilities under open conditions.

The meeting emphasized the need to be guided by ****’s Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 20th National Congress of the Communist Party of China, the Central Economic Work Conference, and the national two sessions, in accordance with the decisions and deployments of the Party Central Committee and the State Council, firmly grasp the primary task of high-quality development, steadily advance Chinese-style modernization, comprehensively and accurately implement the new development concept, and accelerate the construction of a new development pattern. The strategy of expanding domestic demand should be organically combined with deepening the structural reform of the supply side, enhancing the coordination of macro policies, effectively implement stock policies, and vigorously promote the effective implementation of incremental policies, ensuring a good start, expanding domestic demand, stabilizing expectations, stimulating vitality, and promoting sustained economic recovery.

This meeting was presided over by Pan Gongsheng, Governor of the People’s Bank of China and Chairman of the Monetary Policy Committee, with committee members Xu Shoubens, Li Chunlin, Liao Min, Xuan Changneng, Wu Qing, Kang Yi, Zhu Hexin, Gu Shu, Wang Yiming, Huang Yiping, and Huang Haizhou in attendance. Li Yunze was absent due to official duties. Officials from the branches of the People’s Bank of China in Inner Mongolia, Fujian, Henan, and Guizhou attended the meeting.

Editor/rice