Monetary Policy Committee: Strengthen Policy Regulation, Enhance Forward-looking Nature, Targeting, and Effectiveness

    The Monetary Policy Committee of the People's Bank of China convened its third-quarter meeting of 2025 (the 110th overall) on September 23.

    The meeting noted that macroeconomic regulation has been strengthened this year, with monetary policy maintaining appropriate easing while sustaining momentum and timely reinforcement. Countercyclical adjustments have been intensified through the comprehensive deployment of multiple monetary policy tools to serve the high-quality development of the real economy, creating a suitable monetary and financial environment for economic recovery and improvement. The reform of the Loan Prime Rate continued to yield benefits, while the market-based adjustment mechanism for deposit rates functioned effectively. Monetary policy transmission efficiency improved, with social financing costs remaining at historically low levels. The foreign exchange market maintained a basic balance between supply and demand, supported by a stable current account surplus and ample foreign exchange reserves. The RMB exchange rate fluctuated in both directions, remaining fundamentally stable at a reasonable and balanced level. Financial markets operated smoothly overall.

    The meeting analyzed the domestic and international economic and financial situation, noting that the external environment has become more complex and severe. Global economic growth momentum has weakened, trade barriers have increased, economic performance among major economies has diverged, and uncertainties remain regarding inflation trends and monetary policy adjustments. China's economy has maintained steady progress with continuous improvement, public confidence has been sustained, and new achievements have been made in pursuing high-quality development. However, challenges persist, including insufficient domestic demand and persistently low price levels. It is essential to implement and refine a moderately accommodative monetary policy, strengthen countercyclical adjustments, better leverage the dual functions of monetary policy tools in both aggregate and structural dimensions, enhance coordination between monetary and fiscal policies, and promote stable economic growth with prices at reasonable levels.

    The meeting examined the main approaches for monetary policy in the next phase, recommending enhanced monetary policy regulation to improve its foresight, targeting, and effectiveness. Based on domestic and international economic and financial conditions and financial market operations, the meeting emphasized carefully calibrating the intensity and pace of policy implementation, ensuring the effective execution of all monetary policy measures, and fully unleashing their effects. Adequate liquidity should be maintained, and financial institutions should be guided to increase monetary and credit supply, ensuring that the growth of social financing and money supply aligns with economic growth and overall price level targets. The meeting emphasized strengthening the guiding role of the central bank's policy interest rates, improving the market-based interest rate formation and transmission mechanism, leveraging the market interest rate pricing self-discipline mechanism, and enhancing the implementation and supervision of interest rate policies. Efforts should be made to reduce the overall cost of social financing. From a macroprudential perspective, the operation of the bond market should be observed and assessed, with attention paid to changes in long-term yields. The monetary policy transmission mechanism should be smoothed to improve the efficiency of fund utilization and prevent idle capital. Enhance the resilience of the foreign exchange market, stabilize market expectations, guard against excessive exchange rate fluctuations, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

    The meeting emphasized guiding large banks to play a leading role in serving the real economy, encouraging small and medium-sized banks to focus on their core responsibilities, strengthening the capital base of banks, and jointly maintaining the stable development of financial markets. Effectively implement various structural monetary policy tools, diligently advance the five major financial initiatives, and intensify support for technological innovation, consumption stimulation, small and micro enterprises, and foreign trade stabilization. Provide financing support for key sectors such as critical infrastructure projects and emerging industries. Utilize securities, fund, and insurance company swap facilities along with stock repurchase and shareholding increase refinancing loans, explore regular institutional arrangements, and maintain capital market stability. Continue to provide financial services supporting the development and growth of private enterprises, fully leverage the coordination mechanism for SME financing, and further address bottlenecks and obstacles in financing for small and micro enterprises. Focus on implementing existing financial policy measures to achieve tangible results, intensify efforts to revitalize existing commercial housing and land resources, consolidate the stable trend in the real estate market, improve foundational real estate financial systems, and help build a new model for real estate development. We will earnestly advance high-level two-way opening-up in the financial sector, enhance economic and financial management capabilities under open conditions, and strengthen risk prevention and control.

    The meeting emphasized that we must be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the Third Plenary Session of the 20th CPC Central Committee and the Central Economic Work Conference, follow the decisions and arrangements of the Party Central Committee and the State Council, firmly grasp the primary task of high-quality development, steadily advance Chinese-style modernization, fully and accurately implement the new development philosophy, and accelerate the formation of a new development paradigm. Strengthening the domestic economic cycle should be placed in a more prominent position. The relationship between aggregate supply and aggregate demand should be coordinated, macro-policy coordination enhanced, and policy continuity and stability maintained while increasing flexibility and foresight. Efforts should be made to expand domestic demand, stabilize expectations, and stimulate vitality to consolidate and expand the upward momentum of economic recovery.

    The meeting was chaired by Pan Gongsheng, Governor of the People's Bank of China and Chairman of the Monetary Policy Committee. Members of the Monetary Policy Committee in attendance included Xu Shouben, Li Chunlin, Liao Min, Xuan Changneng, Li Yunze, Wu Qing, Zhu Hesheng, Gu Shu, Huang Yiping, and Huang Haizhou. Kang Yi and Wang Yiming were absent due to official duties. Responsible officials from the Beijing, Shanxi, Hainan, Sichuan, and Tibet Autonomous Region branches of the People's Bank of China attended the meeting as non-voting participants.