China shifts to looser monetary policy for first time in 14 years as markets respond positively

China has shifted its monetary policy from "prudent" to "moderately loose" for the first time in 14 years, aiming to address economic challenges, including deflation. This change has led to a rise in stock prices and a drop in bond yields. The decision comes ahead of the Communist Party's annual economic meeting, where leaders will discuss strategies to boost consumption and investment. Recent data shows consumer prices rose only 0.2% year-on-year, indicating ongoing deflationary pressures. In response to economic struggles, the government has implemented various stimulus measures, including interest rate cuts and a significant debt swap plan for local governments. Analysts anticipate further discussions on enhancing household spending at the upcoming Central Economic Work Conference.