PBOC’s Last Monetary Policy Meeting for 2018 Signals Greater Support for Real Economy


The Chinese central bank has announced that it convened its final routine monetary policy meeting for 2018 on 26 December, to conduct analysis of prevailing domestic and external economic conditions and make arrangements for near-term monetary policy.

The meeting said that PBOC would push for the financial sector to “further strengthen” the vigour of support for the real economy,” and in particular  “form a positive triangular cycle comprised of a push for stable monetary policy, strengthening of the vigour of micro-economic actors and employing the role of capital markets, to drive an overall positive cycle in the national economy.”

Reference to “strengthening advance assessments of circumstances and forward adjustments and micro adjustments” was not made as it had been at the previous meeting in the third quarter.

The meeting said that PBOC would continue to pay close attention to “marginal changes” to international and domestic economic and financial conditions, as compared to the previous phrasing of “new changes,” while also adding that it would be necessary to “strengthen hardship awareness,” which was also mentioned by China’s Central Economic Work Conference held just days prior.

Other phrases employed by the Central Economic Work Conference that were also applied by the PBOC monetary policy meeting include “expanding the vigour of counter-cyclical adjustments, and “innovation and improvement of macro-controls.”

“Maintenance of neutral” monetary policy was changed to “focusing more on elastic moderation,” while reference to “effectively managing the general sluice gate of the money supply” was removed.

The routine monetary policy meeting omitted reference to “effectively grasping the vigour and rhythm of structural deleveraging,” and with regard to Chinese yuan called for “maintaining the basic stability of the renminbi exchange rate at a rationally balanced level.”