The People's Bank of China said major central banks are shifting toward tighter policy as imported inflation pressures intensify, but it expects this adjustment cycle to be relatively mild and less disruptive to global markets than previous episodes. In its Second Quarter 2026 Monetary Policy Implementation Report released on August 12, the PBOC said geopolitical conflict in the Middle East, swings in international commodity prices, structural demand linked to the artificial intelligence investment boom, and tariff-related pressures are pushing inflation higher across major economies. The report said the European Central Bank and Bank of Japan have already raised rates, while the Federal Reserve has kept rates unchanged but continues to signal a hawkish stance. The PBOC said some emerging market economies have also entered hiking cycles or are leaning tighter. It argued that this tightening phase differs from past shocks because the energy shock appears more moderate, energy resilience has improved, and policy settings were already restrictive rather than shifting abruptly from ultra-loose conditions. Even so, it warned about sovereign debt stress, equity valuation corrections and capital outflow risks in vulnerable emerging markets. For China, the report reiterated a self-oriented monetary policy approach and said the central bank will use existing tools, prepare incremental measures, keep liquidity ample and guide short-end money market rates to remain stable around the policy rate.