Chinese policymakers are likely to maintain accommodative monetary conditions in the second half of the year, remaining prepared to step up policy support in case of any significant economic slowdown pressures or unexpected external shocks, analysts said on Monday.

Soft domestic inflation and rising expectations of United States interest rate cuts have offered ample room for monetary policy continuity and flexibility, they said, with a focus on ramping up targeted support for technological innovation, industrial upgrading and internationalization of the renminbi.

Lou Feipeng, a researcher at the Postal Savings Bank of China, said that the monetary authorities are likely to exert continuous support for the economy in the second half to consolidate the solid economic momentum and improved market confidence seen in the first half.

While the central bank may focus on improving the effectiveness of existing monetary policy tools, additional support, such as cuts to the reserve requirement ratio and policy interest rates, cannot be ruled out, given the current need to reduce real financing costs amid low domestic inflation.

"Structural monetary instruments may be scaled up if needed to support key areas such as technological innovation and industrial upgrading," he said.

Lou added that a cut in the over-five-year loan prime rate — a benchmark of mortgage rates — can help stabilize the sluggish property market and boost consumption.

Xi Jinping, general secretary of the Communist Party of China Central Committee, called for efforts to maintain policy continuity and stability while presiding over a symposium on July 23 to seek advice from non-CPC personages on economic work.

He also called for enhancing flexibility and foresight to keep employment, businesses, markets and expectations stable.

This is in line with an idea embodied in Xi Jinping's economic thought — improving macroeconomic adjustments in accordance with changes in the principal contradiction of economic development.

The People's Bank of China, the country's central bank, also sent a clear signal of monetary policy continuity, saying on Friday after a midyear work meeting that it would continue to implement a moderately loose monetary policy, keep ample liquidity and promote industrial upgrading to resolve structural issues in key industries.

With the tone of a moderately loose monetary policy unchanged, Guo Yiping, an analyst at Xiangcai Securities, said that future adjustments to aggregate monetary policy will likely hinge on the impact of evolving global tariff policies and changes in market expectations for domestic demand, with a remaining possibility of interest rate cuts later this year.

Yang Haiping, a nonresident research fellow with the Beijing Wealth Management Industry Association, said that if the US Federal Reserve cuts interest rates in the second half, it will create more room for China to continue with monetary policy easing. Expectations of US rate cuts have risen after the US reported disappointing job readings for July last week.

Yang also highlighted the central bank's emphasis on renminbi internationalization, which reflects the growing importance of promoting the currency's global use for mitigating external financial shocks and supporting Chinese enterprises going global.

The central bank pledged after the midyear work meeting to prudently and effectively advance the internationalization of the renminbi, introducing specific measures such as improving the integrated cash pool policy of domestic and foreign currencies, refining the policies governing the overseas listings of domestic enterprises, and establishing a stable liquidity supply system across a full range of maturities in offshore renminbi markets.

zhoulanxv@chinadaily.com.cn