Central Bank: Strengthen financial support for key areas such as expanding domestic demand, technological innovation, and small and micro enterprises

Ask AI · How can the central bank break the “strong supply and weak demand” dilemma through financial support?

China News Network, March 31st — According to a notice on the website of the People’s Bank of China, the People’s Bank of China’s Monetary Policy Committee held its 2026 first-quarter meeting (the 112th overall) on March 26.

The meeting held that, since the beginning of this year, macroeconomic policy has been more proactive and effective, monetary policy has remained moderately accommodative, and efforts have been strengthened for countercyclical and cross-cycle adjustment. Multiple monetary policy tools have been used comprehensively to create a suitable monetary and financial environment for the economy to continue improving for the better and getting on the right track. The reform of the loan prime rate reform has continued to release its effectiveness; the mechanism for market-oriented adjustments to deposit interest rates has played an effective role; the efficiency of monetary policy transmission has been strengthened; and social financing costs remain at historically low levels. In the foreign exchange market, supply and demand are basically balanced. The RMB exchange rate floats in both directions, and remains broadly stable at a reasonable and balanced level. Overall, financial markets are operating smoothly.

The meeting analyzed the domestic and international economic and financial situation and held that the impact of changes in the external environment is deepening. Global economic momentum is weak, geopolitical conflicts and trade and economic disputes occur frequently, and the performance of major economies has diverged somewhat. There is uncertainty regarding inflation trends and adjustments to monetary policy. China’s economy is generally operating steadily and making progress while maintaining stability. High-quality development has achieved new results, but it still faces issues and challenges such as strong supply and weak demand and external shocks. It is necessary to continue implementing a moderately accommodative monetary policy, increase the strength of countercyclical and cross-cycle adjustments, better play the dual total amount and structural functions of monetary policy tools, strengthen coordination and cooperation between monetary and fiscal policies, and promote stable economic growth and a reasonable rebound in prices.

The meeting studied the main ideas for monetary policy in the next stage and proposed that the integrated effects of incremental policies and stock policies be leveraged. Multiple tools should be used comprehensively to strengthen monetary policy regulation, and the intensity, pace, and timing of policy implementation should be kept well aligned with the domestic and international economic and financial situation and the operation of financial markets. Keep liquidity ample so that the growth of the scale of social financing and the growth of money supply are consistent with the targets for economic growth and expectations for the overall price level. Strengthen the guidance role of the central bank’s policy interest rates, improve the market-oriented interest rate formation and transmission mechanism, give full play to the role of the market interest rate pricing self-discipline mechanism, and strengthen the implementation and supervision of interest-rate policies. Standardize the business conduct of credit markets, reduce financing intermediary fees, and promote social comprehensive financing costs to remain at a low level. From the perspective of macroprudential policy, observe and assess the operation of the bond market, and pay attention to changes in long-term yields. Keep the monetary policy transmission mechanism flowing and improve the efficiency of capital use. Enhance the resilience of the foreign exchange market, stabilize market expectations, and maintain the RMB exchange rate’s basic stability at a reasonable and balanced level.

The meeting pointed out that it is necessary to guide large banks to play the main force role in providing financial services to the real economy, and to encourage medium-sized and small banks to focus on their primary responsibilities and main businesses, thereby strengthening banks’ capital strength. Make good use of various structural monetary policy tools, optimize tool management, and solidly carry out the “five major areas” of financial work, strengthening financial support for key areas such as expanding domestic demand, scientific and technological innovation, and small and micro enterprises. Continue to provide quality financial services to support the growth and strengthening of the private economy. Maintain stable operation of financial markets. Earnestly advance high-level two-way opening of finance, and improve economic and financial management capabilities and risk control capabilities under conditions of opening to the outside world.