China has said they will adopt a “moderately loose” stance for monetary policy in 2025, with this wording change marking its biggest shift in strategy in 14 years.
China’s central bank has outlined five policy stances as “loose”, “appropriately loose”, “prudent”, “appropriately tight” and “tight” and last took an “appropriately loose” monetary policy after the 2008 global financial crisis, and then remaining at “prudent” since late 2010.
The announcement came at a “crucial” talk with Political Bureau of the Communist Party of China Central Committee and 10 international economic organisations, including the International Monetary Fund.
China’s Premier Li Qiang said China from next would shift to this eased policy strengthen countercyclical measures, step up macroeconomic policies and seek domestic demand expansion on all fronts.
The housing market and stock market must be stabilised, the Politburo added, without adding any further details as of yet.
The promise comes ahead of the annual Central Economic Work Conference, which will set key targets and policy ideas for next year.
Following the announcement China's government bonds rallied while as of Tuesday the STOXX 600 index had fallen 0.5% as luxury stocks dropped thanks to weak Chinese trade data.