The key is not to engage in "flooding" or "sharp turns" in monetary policy

2023-03-24

According to financial statistics released recently, financial data in February continued the strong trend of January, with broad money (M2) growth maintaining a high level, new credit continuing to reach a new high, and new social financing achieving a higher than expected amount. This shows that prudent monetary policy is precise and powerful, credit supply and demand are booming, and the macroeconomic recovery is accelerating. Stabilizing currency is an important foundation for stabilizing the economy, employment, and prices. A key requirement for implementing a sound monetary policy is "stability.". Macroeconomics is an uninterrupted continuous process. Monetary policy is mainly aimed at smoothing out the fluctuations in aggregate demand that occur during economic operation, and avoiding the destruction of production factors and social wealth caused by economic fluctuations. Monetary policy should be steady in strength to prevent excessive investment, rising debt, asset foam and other problems caused by "flood"; Make precise efforts in the structure, increase the endogenous stability of the economy through optimizing the structure, and ensure long-term stable and healthy development of the economy. A prudent monetary policy will effectively promote the optimal combination of rapid economic and social development, full employment, and stable prices. As the macroeconomic and price levels continue to remain stable, residents' expectations of future income, enterprises' expectations of future operations, and foreign investment's expectations of economic and trade exchanges become more stable, which helps to enhance the certainty of a virtuous interactive cycle of effective demand and effective supply, consumption and investment, domestic and external demand. This will further enhance macroeconomic stability, allowing monetary policy to stabilize the macroeconomic market through lower policy costs. In recent years, in the face of complex and severe domestic and international situations, China has always adhered to the implementation of a prudent monetary policy, adhering to the principle of stability as the first priority, maintaining a normal monetary policy space in response to steady changes. When the economy goes down, it does not engage in "flooding", nor does it engage in "sharp turns" when the economy recovers. It uses the stability of monetary policy to address internal and external uncertainties, creating a suitable monetary and financial environment for stabilizing the macroeconomic market. This year's "Government Work Report" proposed that a prudent monetary policy should be precise and powerful. Maintain a basic match between the growth rate of the broad sense money supply and the growth rate of social financing scale, and support the development of the real economy. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. This means that in the face of the coexistence of strategic opportunities and risks, as well as the increase in uncertain and unpredictable factors, it is necessary to adhere to the principle of stability, seek progress while maintaining stability, maintain policy continuity, stability, and pertinence, while strengthening the coordination and coordination of various policies to form a joint force to jointly promote high-quality development. It is worth noting that, on the basis of "stability", structural monetary policy tools should also be innovated and used to enhance the momentum for high-quality development. Structural monetary policies should "focus on key areas, be reasonable and appropriate, and have both progress and retreat." They should give play to the triple advantages of aggregate, structural, and price, comprehensively expand domestic demand and optimize supply, promote the inclination of financial resources to key areas such as small and micro enterprises, green development, and scientific and technological innovation, promote effective qualitative improvement and reasonable quantitative growth of the economy, and inject new impetus into macroeconomic stability and high-quality development. To implement the spirit of the National People's Congress and the National People's Congress, it is necessary to accurately and effectively implement a sound monetary policy, maintain a reasonable growth in monetary credit, guide comprehensive financing costs to steadily decrease, and give full play to the incentive and guidance role of structural monetary policy tools

Edit:Hou Wenzhe    Responsible editor:WeiZe

Source:economic dairy

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