China’s central bank pledges to maintain accommodative policy amid weak demand, external shocks

BEIJING, July 8 (Reuters) – China’s central bank said on Wednesday it would maintain an appropriately loose monetary policy and ramp up financial support to revive domestic consumption, ​adding that the economy was facing a mismatch ‌between strong supply and weak demand.

Global economic growth remains sluggish, geopolitical tensions and trade frictions are rising, and uncertainty over inflation and monetary policy persists, the People’s Bank of China said after its second-quarter Monetary Policy ‌Committee ​meeting.

“China’s economy has remained generally stable ⁠while progressing toward higher-quality development, ⁠with new achievements in upgrading and optimization,” the central bank said. “However, it still faces challenges including strong supply but weak demand, structural divergences, and external shocks.”

The central bank also ​pledged to leverage its aggregate and structural monetary policy tools, enhance the coordination between monetary and fiscal policy, and ⁠promote stable economic growth and a ⁠reasonable rebound in prices.

Liquidity should be kept ample ​so that growth in social financing and money supply is ​aligned with economic growth and inflation objectives, it said.

The ‌bank said it would strengthen guidance on policy interest rates, drive a reasonable rebound in prices, and keep the yuan basically stable at a reasonable and balanced level.

China’s central bank ramped ⁠up liquidity injections on June 30, doubling the amount of cash supplied through overnight reverse repos as seasonal month-end demand intensified.

The PBOC ⁠has refrained from ‌cutting policy rates or banks’ reserve requirement ratios (RRRs) ⁠since May 2025, instead shifting its focus ​towards ‌refining its monetary policy framework and improving policy ​transmission.

China is ⁠due to release second-quarter GDP data next week, with analysts expecting growth to moderate from the first quarter’s 5.0% pace. The government has set a 2026 growth target of 4.5% to 5.0%.

(Reporting by Ethan Wang and Kevin Yao; Editing by Andrew Heavens ​and Hugh Lawson)