(Yicai) Feb. 11 -- The People’s Bank of China will continue to implement a moderately loose monetary policy, prioritizing stable economic growth and reasonable price recovery, according to its fourth-quarter monetary policy report.

The central bank said in the report released yesterday that it will ensure that growth in the scale of social financing and money supply aligns with expected economic growth and overall price level targets, underscoring its commitment to supporting the recovery momentum.

The PBOC said it will calibrate the intensity, pace, and timing of policy measures in line with domestic and international economic and financial conditions, as well as financial market performance. It will flexibly and efficiently use policy tools such as reserve requirement ratio cuts and interest rate cuts to maintain ample liquidity and relatively loose social financing conditions, guide reasonable growth in total financing, and ensure balanced credit allocation.

The PBOC added that it will further refine the interest rate regulation framework, strengthen the guiding role of its policy interest rate, and improve the market-based interest rate formation and transmission mechanism. It will also enhance oversight of interest rate policy implementation, reduce banks’ liability costs, and keep overall social financing costs at a low level.

At the same time, the central bank will leverage both the quantitative and structural functions of monetary policy tools, effectively implement various structural instruments, and increase financial support for key areas such as expanding domestic demand, scientific and technological innovation, and micro, small, and medium-sized enterprises.

On the exchange rate, the PBOC said it will adhere to a managed floating exchange rate regime based on market supply and demand and referenced to a basket of currencies. It will maintain exchange rate flexibility, allow the yuan to serve as an automatic stabilizer in adjusting the macroeconomy and the balance of payments, strengthen expectations management, prevent risks of excessive exchange rate volatility, and keep the yuan basically stable at a reasonable and balanced level.

The central bank also pledged to expand and enrich its macroprudential and financial stability functions, improve its macroprudential and financial stability management toolkit, maintain financial market stability, and resolutely guard against systemic financial risks.

Editor: Emmi Laine