DeepDive: Some Thoughts on the Stimulus Debate

Our text-based data continue to show that policy will remain accommodative, though likely to a lesser extent than in previous years due to a more cautious tone by policymakers. Stimulus policies continue to focus more on the supply side rather than the demand side, albeit in a more subtle or obscured manner. Check out our DeepDive for more.

Our text-based Monetary Conditions Indicator (aka monetary policy easing index), while still above its long-term average, has declined from the latest peak levels observed in 2021 and 2022. While the indicator suggests that monetary conditions should remain accommodative, it also signals that the extent of easing will likely be more limited this year, which we have written about extensively in our recent reports. This aligns with the slightly more hawkish tone in recent policy texts that we began to notice late last year (see QuickScan: Politburo Update December 2023 and DeepDive: Key Messages from the PBoC’s Monetary Policy Outlook).