The People's Bank of China Monetary Policy Committee held its 2026 third-quarter regular meeting (the 114th overall) recently.

As a bellwether for the next stage of monetary policy, this meeting maintained the overall tone of "keeping monetary policy moderately loose" while adjusting some wording, sending new signals.

The meeting studied the main ideas for monetary policy in the next stage, emphasizing the comprehensive use and timely adjustment of monetary policy tools, maintaining ample liquidity, and aligning the growth of social financing scale and money supply with economic growth and expected price level targets.

Compared with the second-quarter meeting, this meeting newly proposed "promoting the reform and improvement of the monetary policy operational framework."

Dong Ximiao, chief economist at Zhaolian and executive director of the Shanghai Finance and Development Laboratory, analyzed that the newly added phrase "promoting the reform and improvement of the monetary policy operational framework" is aimed at shifting monetary policy regulation from being primarily quantity-based to primarily price-based, further strengthening the guiding role of the central bank's policy interest rate.

Its essence is to improve an operational framework centered on the policy interest rate, bounded by the interest rate corridor, and based on market-based interest rate formation and transmission, making liquidity adjustment more refined, interest rate signals clearer, and providing support for market-based pricing mechanisms such as DR benchmark rate loans.

Wang Qing, chief macro analyst at Orient Financial, said this means the central bank will rapidly advance the transition of the monetary policy framework toward a price-based approach.

The current core task is to effectively control the volatility of the short-end money market rate DR001 and guide it to operate steadily around the policy interest rate.

This is the foundation for the effective transmission of the policy interest rate to various major market rates and the shift of monetary policy toward price-based regulation.

It can be seen that since June, with the normalization of the overnight reverse repo tool, the central bank has placed greater emphasis on enhancing the precision and effectiveness of short-end interest rate regulation.

Beyond the improvement of the monetary policy operational framework, the adjustment in policy intensity at this meeting also deserves attention.

Compared with the second-quarter meeting, this meeting upgraded "striving to expand domestic demand" to "stepping up efforts to expand domestic demand," and adjusted "increasing the intensity of counter-cyclical and cross-cyclical regulation" to "increasing the intensity of counter-cyclical regulation."

In this regard, Wang Qing believes these wording changes release a signal that monetary policy will further intensify efforts in the direction of stabilizing growth.

Taking into comprehensive consideration the current economic and financial situation, especially price dynamics, he judges that while strengthening fiscal and monetary policy coordination, the central bank may introduce a batch of pragmatic and effective incremental policy measures: on one hand, structural monetary policy tools will continue to lower costs, increase volume, and expand coverage, providing targeted support for technology financing, inclusive finance, and the construction of the "six networks," promoting the transformation of old and new growth drivers; on the other hand, the coordinated use of multiple monetary policy tools is also worth anticipating.

Dong Ximiao also pointed out that upgrading "striving to expand domestic demand" to "stepping up efforts to expand domestic demand" indicates that expanding domestic demand and stabilizing growth have moved further forward in the ranking and weighting of monetary policy objectives, with policy intensity and pace requirements rising simultaneously.

"'Stepping up efforts' means increasing the intensity of counter-cyclical regulation at the aggregate level, comprehensively using and timely adjusting monetary policy tools, maintaining reasonably ample liquidity, and promoting a steady decline in overall social financing costs; at the structural level, guiding more funds toward key areas such as expanding domestic demand, technological innovation, and small and medium-sized enterprises; in terms of coordination, strengthening the alignment of monetary policy with fiscal policy and industrial policy to form a synergy for expanding domestic demand. Overall, this wording change releases a signal that policy is shifting from clarifying direction to intensifying efforts, stabilizing economic growth with stronger counter-cyclical regulation," Dong Ximiao further stated.