PBOC Vows to Step Up Countercyclical Adjustment
The People’s Bank of China (PBOC) said it will intensify countercyclical adjustment and continue implementing an “appropriately loose” monetary policy, signaling sustained support for growth and a push to guide prices toward a moderate rebound. The pledge came in a statement released on September 24, 2026, following the central bank’s Monetary Policy Committee regular meeting for the third quarter, held in Beijing on September 19, Xinhua News reported.
The meeting — the committee’s 114th overall — weighed an external environment it described as “more complex and volatile” against a domestic economy facing “strong supply but weak demand, structural differentiation, and external shocks.”
A Subtle Shift in Language
The statement reaffirmed the PBOC’s accommodative stance, but the wording differed in several notable ways from the previous quarter. Where the second-quarter meeting had pledged to “strengthen both countercyclical and cross-cyclical adjustment,” the latest language emphasizes stepping up countercyclical adjustment alone — dropping the “cross-cyclical” reference, as Xinhua Finance noted.
The committee also called for “releasing the integrated effects of incremental and existing policies” and enhancing the “forward-looking, flexible, and targeted” nature of policy, while getting the “intensity, pace, and timing” of implementation right, according to Securities Times coverage.
Notably absent was prior language about “strengthening the guidance of the central bank’s policy rate” and “improving the market-based interest-rate formation and transmission mechanism.” Those phrases, present in earlier statements, were not carried forward in the third quarter of 2026. The statement did retain a commitment to “regulate lending market operating behavior” and “reduce intermediate financing fees,” aiming to keep comprehensive social financing costs near historic lows.
Growth, Prices, and Policy Coordination
The meeting pledged to strengthen coordination between monetary and fiscal policy to “promote stable economic growth and a reasonable rebound in prices” — an explicit nod to the deflationary pressure that has weighed on China’s recovery. Officials acknowledged the economy remains challenged by weak demand relative to strong supply.
The committee said it would “comprehensively use and adjust monetary policy tools as appropriate,” maintain ample liquidity, and align growth in the scale of social financing and money supply with economic growth and the expected price-level target. The wording preserves latitude for further reserve requirement ratio (RRR) cuts and rate reductions, which analysts had anticipated before the meeting.
Structural Tools and the “Six Networks”
The statement directed the PBOC to make good use of its structural monetary policy tools, continuously improving their design and management, and to support the financial sector’s “five major articles.” For the first time in this context, it explicitly named support for “six networks” (六张网) construction alongside expanding domestic demand, technological innovation, and micro, small, and medium enterprises.
The “six networks” framework — spanning energy, transport, water, information, logistics, and computing networks — is associated with the 15th Five-Year Plan period. Analysts estimate computing-network construction alone could add roughly RMB 4 trillion in direct investment over that span, with total computing infrastructure investment potentially exceeding RMB 400 billion in 2026.
Bond and Currency Watch
On the bond market, the committee said it would continue to observe and assess conditions from a macro-prudential perspective and “watch changes in long-term yields.”
On the exchange rate, the PBOC added a new emphasis on guarding against market distortions. The statement pledged to “prevent the market’s ‘herd effect’ and self-reinforcement of irrational expectations,” while keeping the RMB exchange rate “basically stable at a reasonable and balanced level.” The new wording coincides with ongoing currency management against a volatile dollar and rising geopolitical tension.
Analysis: Continuity With a Sharper Focus
Taken together, the changes suggest continuity rather than a pivot. The PBOC has held an “appropriately loose” stance — its most accommodative designation in roughly 14 years — since late 2024, as Beijing has sought to counter deflationary pressure and soft domestic demand. The third-quarter statement keeps that trajectory intact while emphasizing execution and precision.
The decision to drop “cross-cyclical” language may signal an intent to concentrate near-term firepower on the current downswing rather than balancing it against longer-horizon structural goals. The addition of “six networks” support casts monetary policy as an instrument of medium-term investment strategy, tying liquidity provision to a signature infrastructure agenda.
Meanwhile, the FX language reflects a persistent concern: as policymakers ease domestic conditions, they must prevent the kind of momentum-driven expectations that can destabilize the currency. The explicit “herd effect” warning is a defensive marker.
What’s Next
Attention now turns to whether the PBOC follows its rhetoric with concrete easing. Governor Pan Gongsheng said earlier in 2026 that the central bank would “flexibly and efficiently” use tools such as RRR and rate cuts. With social financing costs already at historic lows and officials flagging continued headwinds, markets will watch for the timing and magnitude of any cuts — and for signs that easier credit is translating into firmer demand and a clearer rebound in prices.