The PBOC held its H2 2026 work meeting and said it will continue a moderately
loose monetary stance. It will use reverse repos, the Medium-term Lending
Facility (MLF) and government bond operations to provide short-, medium- and
long-term liquidity, keep liquidity ample and guide banks to support effective
financing demand from the real economy. The central bank will refine short-end
rate control, add overnight reverse-repo instruments, narrow the temporary
overnight repo rate corridor, and strengthen execution and supervision of rate
policy, urging financial institutions to disclose comprehensive loan financing
costs to keep overall social financing costs low. At end-June outstanding social
financing was up 7.4% YoY and M2 rose 8.0% YoY. The PBOC reiterated that market
forces will decide the exchange rate and the RMB will be allowed to fluctuate
two-way.
