Policy Overview - The central bank's structural monetary policy focuses on "interest rate cuts and expansion" targeting agriculture, small enterprises, private businesses, and technological innovation, without implementing total "reserve requirement ratio (RRR) cuts or interest rate reductions" for now[4] - The recent policy shift indicates a transition from "leading the market curve" to "synchronizing with the market," reflecting a more precise and coordinated monetary approach[4] Monetary Policy Details - The central bank lowered the re-lending and re-discount rates by 25 basis points (BP), with the one-year re-lending rate now at 1.25%[4] - An additional 500 billion yuan in re-lending for agriculture and small enterprises has been allocated, with a 1 trillion yuan re-lending specifically for private enterprises[4] - The re-lending quota for technological innovation and transformation has been increased by 400 billion yuan, and a combined risk-sharing tool for technological innovation and private enterprise bonds has been established with a total re-lending quota of 200 billion yuan[4] Economic Context - Since the implementation of previous policies, domestic inflation has shown a mild recovery, with the Consumer Price Index (CPI) increasing by 0.8% year-on-year in December 2025, and the Producer Price Index (PPI) declining by 1.9%[5] - Exports achieved a year-on-year growth of 5.5% in 2025 despite external challenges, indicating sustained competitiveness[5] - The Hang Seng Index led global markets, while the Shanghai Composite Index reached 4,100 points on January 15, 2026, highlighting improved market confidence[5] Future Outlook - The central bank emphasizes that the space for RRR cuts is greater than for interest rate reductions, with an increased focus on government bond operations to manage liquidity[6] - The absence of specific policies for the real estate market suggests that future support will likely rely more on fiscal measures rather than monetary policy, such as interest subsidies and reduced transaction costs[7] - Overall, the structural monetary policy reflects a balance between stabilizing growth, mitigating risks, and promoting transformation amid ongoing economic challenges[7]