Abstract: Recently, the China Finance 40 Forum and the China Center for International Economic Exchanges jointly held the 6th Bund Summit to discuss the topic Global Monetary Shifts and Their Impact.
The conference concluded that the U.S. and Europe are entering an interest rate cut cycle. The Federal Reserve's focus is shifting from the risk of persistent inflation to labor market weakness and the prospects for economic growth. The economic situation in Europe is more complex than in the U.S., and the European Central Bank will maintain flexibility in its policy-making. Japan is gradually emerging from long-term deflation, with its monetary policy steadily normalizing.
The Federal Reserve should thoroughly review the lessons learned from its monetary policy since 2020, assess its pros and cons, and enhance the universality of the new monetary policy framework. It should also reevaluate the inflation target, monetary policy tools, and communication with the market. Regarding the inflation target, most international experts believe that the 2% target should not be changed unless absolutely necessary, as doing so could undermine the central bank's credibility.
For China's economy, international experts recommend that China should maintain an loose monetary policy and, if necessary, adopt measures beyond expectations to avoid deflation or prolonged low inflation. Chinese experts believe that the main issue currently facing China's economy is insufficient domestic demand, and that proactive fiscal policy and loose monetary policy are needed to maintain an appropriate nominal GDP growth target.
