The People’s Bank of China recently held its first-quarter monetary policy committee meeting for 2026, confirming a commitment to moderately loose monetary policy and stronger counter-cyclical adjustment. The meeting stressed integrated effects of incremental and existing policies, guiding financial institutions to increase support for the real economy and keep social financing costs low.

Specifically, the PBOC will guide large banks to take leading roles and support small and medium banks to focus on their core businesses while optimizing credit structure. It will also strengthen coordination between monetary and fiscal policies to support local government bond issuance and trade-in programs, stabilizing market expectations. On the day, the PBOC conducted 7-day reverse repos. Despite a minor net fund withdrawal, market liquidity remained reasonably ample, with Shibor rates staying at low levels.

Analysts believe the dovish stance provides solid support for economic recovery. With PMI back in expansion and consumption gradually warming, continued monetary easing helps reduce corporate financing costs and boost market confidence. Further tools such as reserve requirement ratio cuts and interest rate reductions may be deployed to maintain liquidity, supporting steady economic growth in the second quarter and benefiting stocks and bonds.