(Yicai) Feb. 14 -- The People's Bank of China said it will use various monetary policy tools and make any necessary policy adjustments based on the domestic and international economic and financial situations, as it pursues a “moderately loose” stance this year.

Promoting reasonable price increases will be as a key consideration of monetary policy in 2025, the central bank also stated in a monetary policy report for the fourth quarter of last year released yesterday.

China’s top leadership pledged in December to embrace a “moderately loose” monetary policy this year in a move away from the “prudent” stance taken since 2011. The last time monetary policy was moderately loose was in 2008 to 2010 following the global financial crisis.

The prudent monetary policy implemented last year achieved positive results, the PBOC said in the report, providing strong support for the real economy and the stability of financial markets and driving the economy toward a sustained recovery.

The central bank said it further aims to maintain ample liquidity this year while ensuring the growth of social financing and making sure that the money supply matches the economic growth and price level targets.

Economists expect the government to set this year’s economic growth target at around 5 percent, the same as last year. Gross domestic product increased by 5 percent in 2024, driven by exports and stimulus measures.

In terms of policy transmission, the PBOC said it will enhance the efficiency of the existing financial resources, strengthen the guiding role of policy rates, improve the market-based mechanism for determining interest rates, strive to lower corporate and household borrowing costs, and increase financial support for technological innovation and consumption.

In terms of exchange rate policy, the bank said it will continue to implement a managed floating exchange rate guided by market supply and demand while referencing a basket of currencies.

The PBOC will allow the market to play a decisive role in determining exchange rates, enhance the resilience of the forex market, stabilize expectations, and prevent excessive swings, all while ensuring that the Chinese yuan remains broadly stable at a reasonable and balanced level.

The central bank further said it will further explore and expand its macroprudential and financial stability functions while firmly upholding the bottom line of preventing systematic financial risks.

Editor: Futura Costaglione