Domestic aggregate policy remains moderately accommodative, RMB appreciation increases foreign exchange loss pressures for enterprises---W28 Domestic Macro Overview
- The Q2 Monetary Policy Committee meeting showed a more cautious outlook regarding the external environment. The domestic economy is described as advancing towards new and better directions, but with strong supply, weak demand, and ongoing structural divergence. Overall policy remains moderately accommodative. Liquidity remains ample, and policy focus is on promoting the transmission from ample money supply to broader credit availability. Interest rate policy emphasizes transmission efficiency and addressing intermediary costs.
- In May, the central parity rate of the RMB continued to appreciate for the eighth consecutive month. The stronger RMB could further worsen the negative impact on corporate financial positions in Q2. Net cross-border capital inflows remained basically stable. Foreign capital increased their holdings of RMB bonds, and the pace of payments by import companies slowed as tensions in the Middle East eased.
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