BEIJING (Reuters)

China’s central bank announced it would adjust the pace and intensity of policy implementation based on domestic and global economic conditions.

The economy, the world’s No.2, faces pressures this year due to U.S. tariffs and persistent deflation at home. The People’s Bank of China (PBOC) highlighted the increasingly complex external environment, including weakening global growth, rising trade barriers, and diverging economic performances among major economies.

The bank noted ongoing difficulties such as insufficient domestic demand, low price levels, and hidden risks. It recommended increasing the intensity of monetary policy adjustments while enhancing their forward-looking, targeted, and effective nature.

In May, the PBOC introduced easing measures like interest rate cuts and liquidity injections to mitigate the economic damage from the U.S.-China trade war. Investors are keenly watching for new stimulus signals from an upcoming Politburo meeting and a future plenum later this year, which will likely address the country’s 2026–2030 five-year plan.

Analysts at ANZ do not expect aggressive actions unless there’s a significant shift in leadership’s economic beliefs. They predict a 10 basis point cut in the key interest rate before the Politburo meeting and a subsequent 30 basis point reduction after the plenum.

The PBOC aims to guide financial institutions in increasing credit supply and lowering overall social financing costs. It also committed to enhancing the foreign exchange market’s resilience to prevent exchange rate fluctuations while maintaining the yuan’s stability. Regarding the struggling property market, the bank plans to revitalize existing commercial housing and land inventory while consolidating stability in that sector.