Author：Wall Street CN
Key points
event:On February 10, 2026, the People's Bank of China released its 2025 Q4 Monetary Policy Implementation Report.
The importance of "promoting economic growth and a reasonable recovery in prices" has been elevated.In Q3, the monetary policy document placed "taking the promotion of reasonable price recovery as an important consideration in grasping monetary policy" as the fourth sentence in the important work section of the summary. In Q4, the monetary policy document placed it as the second sentence, second only to the general requirement of "moderately loose monetary policy," indicating a significant increase in its importance.
The probability of a short-term interest rate cut is low.The phrase "promoting a decline in overall social financing costs" in the Q3 monetary policy statement has been changed to "promoting low levels of overall social financing costs" in the Q4 monetary policy statement. This indicates a decrease in the demand for further reducing financing costs for the real economy, suggesting the central bank will be more cautious in using aggregate easing tools in the next phase. The task of reducing financing costs will primarily be achieved through "orderly expanding the coverage of the disclosure of comprehensive financing costs for corporate loans." The disclosure of comprehensive financing costs for corporate loans will be expanded from pilot regions and financial institutions to the whole country, facilitating companies to compare and choose different loan options.
The regulatory role of exchange rates should be emphasized.Although the phrase "leveraging the exchange rate as an automatic stabilizer for the macroeconomy and the balance of payments" was previously included in the monetary policy implementation report, the Q4 report added it to the summary section, indicating a marginal increase in its importance. In 2026, against the backdrop of continued easing of fiscal discipline in the US and Japan, my country's constrained fiscal policy guarantees the foundation for RMB appreciation.
A moderate appreciation of the RMB is beneficial in several ways. First, it helps balance trade activities and prevents the unilateral expansion of the trade surplus from impacting economic and trade relations. Second, it facilitates the return of funds to the domestic market, injecting incremental liquidity into the capital market and providing positive support for the domestic economic cycle. Third, against the backdrop of overall rising commodity prices, a moderate appreciation will, to some extent, offset imported inflation and alleviate the raw material cost pressures on enterprises.
The importance of "promoting economic growth and a reasonable recovery in prices" has been elevated.
In Q3, the monetary policy document placed "taking the promotion of reasonable price recovery as an important consideration in grasping monetary policy" as the fourth sentence in the important work section of the summary. In Q4, the monetary policy document placed it as the second sentence, second only to the general requirement of "moderately loose monetary policy," indicating a significant increase in its importance.
The probability of a short-term interest rate cut is low.
The phrase "promoting a decrease in overall social financing costs" in the Q3 monetary policy has been changed to "promoting low levels of overall social financing costs" in the Q4 monetary policy.The demand for further reductions in financing costs for the real economy has declined..
Q4 Monetary Policy mentioned "the domestic and international economic and financial situation and the operation of financial markets, and grasping the strength, pace, and timing of policy implementation," which also points to...The central bank will be more cautious in using aggregate easing monetary policy tools in the next stage.This needs to be considered comprehensively, taking into account both the domestic and international situations.
The task of reducing financing costs will be primarily achieved through "the orderly expansion of the coverage of the disclosure of comprehensive financing costs for corporate loans." The disclosure of comprehensive financing costs for corporate loans will be extended from pilot regions and financial institutions to the entire country, facilitating companies' comparison and selection of different loan options. This emphasis on structural aspects over overall volume is evident in the expansion and integration of structural monetary policy tools undertaken by the central bank since the fourth quarter of 2025.
The Q4 monetary policy statement mentioned that "by the end of 2025, loans to science and technology, green loans, inclusive finance, elderly care industry loans, and digital economy industry loans will grow by 11.5%, 20.2%, 10.9%, 50.5%, and 14.1% year-on-year, respectively, all maintaining double-digit growth and consistently exceeding the overall loan growth rate." In the future, the central bank will focus more on tool coordination and targeted support in its liquidity injections, tilting credit quotas towards key areas such as medium- and long-term loans and high-value-added loans, further supporting the funding needs for technological innovation at the start of the 15th Five-Year Plan.
Emphasis should be placed on the regulatory role of exchange rates.
Although the phrase "giving full play to the function of the exchange rate as an automatic stabilizer for the macroeconomy and the balance of payments" had been included in the monetary policy implementation report before, the Q4 monetary policy report added it to the summary section, indicating a marginal increase in its importance.
In 2026, against the backdrop of continued loosening of fiscal discipline in the United States and Japan, my country's constrained fiscal policy will ensure the foundation for the appreciation of the RMB.
A moderate appreciation of the RMB is beneficial in two ways. First, it helps to balance trade activities and prevent the unilateral expansion of the trade surplus from affecting economic and trade relations. Second, the appreciation of the RMB is conducive to the return of funds to the domestic market, which not only injects incremental liquidity into the capital market, but also provides positive support for the domestic economic cycle.
In addition, against the backdrop of overall rising commodity prices, moderate appreciation will, to some extent, offset imported inflation and alleviate the pressure on enterprises' raw material costs.
Viewing deposit migration from the perspective of overall social liquidity
In its Q4 monetary policy column 3, "Looking at the Total Liquidity from the Perspective of the Merger of Asset Management Products and Bank Deposits," the People's Bank of China clarified that the "outflow" of deposits and the increase in asset management products are inversely related. On the one hand, the total liquidity in the whole society and financial market has not decreased. On the other hand, the underlying assets of asset management products are mostly interbank deposits and certificates of deposit, so the impact on the bond market is limited.
Expanding the scope of supported service consumption sectors
The Q3 monetary policy document mentioned key service consumption sectors, including accommodation and catering, culture and entertainment, education, residential services, and tourism, regarding the scope of service consumption and pension re-lending. The Q4 monetary policy document further expanded the supported areas to include the health industry, digital consumption, green consumption, and retail consumption.
Source: Caitong Securities Research Report
