Galaxy Securities Monetary Policy Outlook: The monetary policy in 2026 will continue to maintain a moderately loose tone, but the loose path will change.

Galaxy Securities releases its outlook on monetary policy: In 2026, monetary policy will continue to maintain a moderately loose tone, but the loose path will change. It is expected that the Chinese economy will maintain stable growth in 2026, and prices will also show a moderate rebound trend. At the same time, the RMB exchange rate will show a steady appreciation. In this context, the primary goal of monetary policy will be full employment and financial stability. The loose monetary policy path will revolve around three main themes: stabilizing expectations, preventing risks, and coordinating with fiscal policy. Looking ahead to 2026, there is a possibility of reducing policy rates by 10-20 basis points for the whole year, and improving the efficiency of monetary policy transmission, promoting a simultaneous reduction in deposit and lending rates; as well as coordinating with a 50 basis point reserve requirement ratio cut to save bank costs. Additionally, the central bank has restarted the purchase of government bonds, and it is expected that purchases of government bonds will become the most important path for the central bank to implement monetary easing in 2026, and the central bank's balance sheet will also show a steady expansion in 2026.