China's PBOC Report Confirms Moderately Loose Monetary Policy

China's central bank, the People's Bank of China (PBOC), has publicly confirmed its commitment to a moderately loose monetary policy aimed at ensuring liquidity and supporting the nation's economic recovery. This decision follows the release of stable financial indicators for the third quarter of 2025.

In its latest monetary policy report, the PBOC indicated that the Chinese economy continues to make steady progress amid various pressures. The report highlighted that high-quality development efforts have led to impressive results, with key economic indicators reflecting considerable stability and demonstrating the economy's strong resilience. Notably, GDP has increased by 5.2 percent year-on-year during the first three quarters.

The PBOC's report elaborated on the tools employed to maintain this moderately loose monetary policy along with substantial liquidity in the market. The central bank has utilized a combination of quantitative easing, price-based methods, and structural tools designed to create a supportive environment for both ongoing economic recovery and the effective functioning of financial markets.

Additionally, the report outlined the PBOC's plans to facilitate a prudent increase in money supply and credit availability through various channels. These include open-market operations, a medium-term lending facility, and tools for re-lending and rediscounting, ensuring that financial institutions are adequately meeting the genuine financing needs of the real economy.

Efforts are also being made to improve the efficiency of capital distribution and to decrease overall financing costs by enhancing the market-oriented interest rate framework. This approach is expected to improve policy transmission and consequently reduce both deposit and lending rates.

The PBOC aims to refine the credit structure further by effectively utilizing its 500 billion yuan re-lending facility, which focuses on consumption and elderly care services. New quotas for scientific and technological innovation, coupled with risk-sharing mechanisms for technology-related bonds, are expected to stimulate consumption recovery and drive innovation.

Furthermore, the report emphasized the importance of ensuring the renminbi's stability. The central bank will facilitate market-driven exchange rate formation while employing various measures to stabilize market expectations amidst complex economic conditions.

Preventing financial risks remains a priority for the PBOC, which aims to address key risk areas through systematic monitoring and early warning mechanisms. The effects of its countercyclical monetary policy adjustments are increasingly evident, contributing to improved financial stability.

As of the end of September, total social financing and M2 have risen by 8.7 percent and 8.4 percent year-on-year, respectively, while renminbi loans reached an impressive 270.4 trillion yuan. With borrowing costs remaining relatively low, average rates on newly issued corporate loans and mortgages have decreased significantly, aiding overall economic conditions.

Looking ahead, the PBOC plans to uphold its moderately loose monetary policy by leveraging a combination of tools to ensure liquidity and align credit and money supply growth with economic targets. The central bank is dedicated to enhancing its monetary policy framework and execution to promote reasonable price increases.

In summary, China remains committed to maintaining a stable level of the yuan within a managed floating regime while continuing to strengthen macroprudential measures and financial stability capabilities. This comprehensive approach is designed to support the resilience of the Chinese economy amid ongoing global uncertainties.