The 2026 Work Conference of the People's Bank of China was recently held, which released a series of policy signals. The People's Bank of China stated that it will continue to implement a moderately loose monetary policy in 2026, increase efforts in countercyclical and cross cyclical adjustments, and improve the quality and efficiency of financial services for the high-quality development of the real economy. A series of deployments were made around monetary policy at the meeting: promoting high-quality economic development and reasonable price recovery as important considerations for monetary policy, flexibly and efficiently using various monetary policy tools such as reserve requirement ratio cuts and interest rate cuts, maintaining sufficient liquidity, keeping social financing conditions relatively loose, guiding the reasonable growth of financial aggregate and balanced credit supply, so that the growth of social financing scale and money supply matches the expected goals of economic growth and overall price level. In the view of Wang Qing, Chief Macro Analyst of Dongfang Jincheng, the People's Bank of China may mainly guide the decline of enterprise and resident loan interest rates by lowering policy interest rates, structural monetary policy tool interest rates, and personal housing provident fund loan interest rates in 2026. This means that there is room for a reduction in residential mortgage interest rates, consumer loan interest rates, and operating loan interest rates in 2026, and the financing costs of government and corporate bonds will also be lowered accordingly. Wang Qing predicts that the People's Bank of China may cut interest rates twice by 20 to 30 basis points in 2026. Goldman Sachs' recent report suggests that the People's Bank of China may implement two 10 basis point interest rate cuts in 2026. Liu Jing, Chief Economist of HSBC Global Investment Research in Greater China, stated that new policy financial instruments may continue to play a role as "quasi fiscal" tools, and there may still be room for further interest rate cuts of 20 basis points in 2026, with the possibility of a 50 basis point reserve requirement ratio cut. In terms of quantitative monetary policy, in 2026, the People's Bank of China may mainly rely on Medium Term Loan Facility (MLF) and buyout reverse repo to inject medium-term liquidity into the market, while combining treasury bond trading and reserve ratio reduction to inject long-term liquidity into the market. Currently, there are abundant quantitative easing policy tools available, and we predict that the central bank may lower reserve requirements ratio (RRR) once or twice in 2026, with a magnitude of 0.5 to 1 percentage point, "said Wang Qing. The meeting also emphasized the need to smooth the transmission mechanism of monetary policy, give full play to the guiding role of policy interest rates, ensure the implementation and supervision of interest rate policies, and promote the low operation of social comprehensive financing costs. Expand the coverage of comprehensive financing costs for explicit corporate loans in an orderly manner, and promote the comprehensive financing costs for explicit personal loans. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and prevent the risk of exchange rate overshoot. The meeting reiterated the need to increase efforts in countercyclical and cross cyclical adjustments, coupled with the Chinese central bank's commitment to building a scientific and prudent monetary policy system. Analysts believe that this means that monetary policy will not be greatly expanded in 2026. (New Society)