A few words in a recent policy document really took me by surprise—"moderately loose." Many of you might think there's nothing special about this, but I can tell you, this time it’s really different!
You have to understand that since 2009, our country's monetary policy has mainly been characterized by the word "prudent," whether it's followed by "flexible and moderate," "appropriate tightening or loosening," or "precise and powerful," the core principle has always remained the same. But this time, they suddenly used the phrase "moderately loose," and its significance is not trivial!
Why do I say this? Let's look back in history. The last time the term "moderately loose" was used was after the 2008 global financial crisis. At that time, we introduced a 4 trillion yuan stimulus plan to boost economic recovery, but it also led to asset price bubbles. Since then, policymakers have been particularly cautious, fearing the same mistakes could happen again.
The sudden use of "moderately loose" this time could be seen as a break from the traditional thinking of "avoiding excessive liquidity." In other words, this suggests that policymakers have changed their judgment of the current economic situation and may adopt more proactive monetary policies. For the market, this is like a bombshell.
So, many years from now, you may not remember other policy details, but you’ll most likely remember that during this meeting, the words "moderately loose" made a comeback. As for what changes this will bring, we’ll have to wait and see how the policies are actually implemented. Investors, be sure to pay close attention!
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