Recently, the People's Bank of China released the "Report on the Implementation of China's Monetary Policy in the Fourth Quarter of 2025" (hereinafter referred to as the "Report"), analyzing the current economic and financial situation and clarifying the main ideas for the next stage of monetary policy. Analysts believe that the report has released some new signals and proposals, becoming a compass for guiding financial support entities. When analyzing the current domestic and international economic and financial situation, the report points out that from a foreign perspective, the impact of external environmental changes is deepening, the growth momentum of the world economy is insufficient, trade barriers are increasing, the economic performance of major economies is differentiated, and there is uncertainty in inflation trends and monetary policy adjustments. From a domestic perspective, the overall operation of China's economy is stable and progressing steadily, with new achievements in high-quality development. However, there are still challenges such as strong supply and weak demand. At the same time, China's economic foundation is stable, with many advantages, strong resilience, and great potential. The long-term support conditions and basic trends for improvement have not changed. We must remain firm in confidence, make good use of our advantages, and respond to challenges, continuously consolidating and expanding the momentum of economic stability and improvement. For the next stage of monetary policy, the "Report" proposes to "place the strengthening of the domestic circulation in a more prominent position", "focus on expanding domestic demand, optimizing supply, optimizing increment, and revitalizing stock", "continue to implement a moderately loose monetary policy", and "flexibly and efficiently use various policy tools such as reserve requirement ratio cuts and interest rate cuts". Li Chao, Chief Economist of Zheshang Securities, stated that it is expected that there will be a total easing operation of 25-50BP reserve requirement ratio cuts and 10BP interest rate cuts in 2026. The pace is expected to be gradual and the frequency will not be too high. In addition, it is expected that structural policy tools will continue to be used, while simultaneously strengthening the structural guidance of credit, expanding domestic demand, technological innovation, and small and medium-sized enterprises are key areas of support. Expanding domestic demand is the primary task of economic work in 2026 and also the key direction of current policy coordination efforts. Column 1 of the Report provides a detailed explanation of "fiscal and financial synergy to support domestic demand expansion" and summarizes three main ways in which monetary and fiscal policies can be coordinated. Zhang Di, Chief Macro Analyst of China Galaxy Securities, believes that the coordinated efforts with fiscal policy aim to enhance the effectiveness of monetary policy implementation. Since 2024, the countercyclical adjustment of monetary policy has shown a clear characteristic of coordinated efforts with fiscal policy. In the future, this characteristic will become even more significant, and the countercyclical adjustment of monetary policy will present a "flexible and efficient" approach, combining both total and structural tools. The report also proposes to effectively implement various structural monetary policy tools, solidly carry out the "five major articles" of finance, and strengthen financial support for key areas such as expanding domestic demand, technological innovation, and small and medium-sized enterprises. Column 2 and Column 4 of the Report also discussed related topics such as green finance and one-time credit repair policies. This means that the future policy ideas of the central bank emphasize coordination with finance, and focus more on structural measures, implementing more precise support measures in specific areas. ”Wen Bin, Chief Economist of China Minsheng Bank, stated. He believes that overall, under the direction of stabilizing growth, stabilizing prices, expanding domestic demand, and strengthening policy coordination, the supportive monetary policy stance remains unchanged, continuing the moderately loose tone. However, against the backdrop of a stable and positive domestic economy, the increasing importance of stable interest rate differentials, and credit interest rates already at a relatively satisfactory level, a certain trigger is needed for an increase in overall easing. In the short term, policy interest rates should focus on stability. (New Society)