China's central bank has signaled a measured approach to monetary easing this year, pledging to maintain ample liquidity to support economic recovery, according to a statement released on Thursday following a meeting held by the People's Bank of China.

The meeting, chaired by PBOC Governor Pan Gongsheng, reaffirmed its commitment to follow the "moderately loose" monetary policy set in the recently announced annual Government Work Report. The PBOC signaled more cuts to the reserve requirement ratio and policy rates "at an appropriate time" given evolving domestic and global economic conditions.

To maintain sufficient liquidity, the PBOC will continue using various facilities, such as open market operations to maintain ample liquidity, pledging that the growth of total social financing and money supply will match targeted economic growth and inflation this year.

China plans to lower overall financing costs for businesses, strengthen communication with markets to improve policy transparency, and ensure that the yuan remains stable at a "reasonable and balanced level".

This year, the Government Work Report, for the first time in over a decade, emphasized the pursuit of a "moderately loose" monetary policy, after adhering to a "prudent monetary stance" from 2011 to 2024.

The report also highlighted timely adjustments to the reserve requirement ratio and interest rates, while refining new structural monetary policy instruments to support the sound development of sectors such as real estate and the stock market.

During the Thursday meeting, the PBOC said it will strengthen financial services in strategic areas, key sectors and weak links in the economy. It will employ various structural monetary policy tools to guide financial institutions in increasing support for technology finance, green finance, inclusive finance and pension finance.

The central bank is also exploring new structural monetary policy instruments to bolster investment and financing in technological innovation, stimulate consumption and stabilize foreign trade, according to the meeting.

The PBOC also reaffirmed its commitment to preventing and mitigating financial risks in key areas while maintaining overall market stability. Authorities pledged to support the steady development of capital markets and continue efforts to address debt risks associated with local government financing vehicles.

A market-oriented and law-based approach will be taken to support the risk resolution of small and medium-sized financial institutions. Meanwhile, China will refine its macro-prudential management framework for real estate finance and improve the financial system for the property sector.

In line with deepening financial reforms and opening-up, the PBOC vowed to accelerate reforms to improve the central banking system. Efforts will be made to optimize financial markets, financial services and financial market infrastructure, while also improving the legal framework for finance.

China will steadily advance institutional opening-up in its financial services sector and financial markets, while cautiously and pragmatically promoting the internationalization of the yuan, the meeting said.

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