PBoC and financial regulators act, but even with fiscal measures underway, are unlikely to drastically change the path of the economy.

As summarized by Bloomberg:

To me, it’s curious it took so long, then followed by a flurry of activity in the last 48 hours preceding the announcement. I have no particular insights into the workings of policymakers under the current regime, so I’ll let others debate the sources of delayed action. However, here are some macro indicators that show the need for some action — decelerating growth, and deflation. First GDP growth (q/q SA):

Taken at face value, 0.7% q/q is 2.8% annualized(!). There were doubts that under previous set of macro and regulatory policies, the 5% target (y/y I think) would be hit.

Source: Bloomberg, 24 Sep 2024.

Second, deflation. More worrying in some ways is the decline in prices — not in

Keep reading this article on Econbrowser Blog - James Hamilton & Menzie Chinn.