No central bank’s 2022 has been turned upside down more abruptly than Yi Gang’s People’s Bank of China (PBOC).

That’s saying a lot given the economic shocks complicating the year for US Federal Reserve Chairman Jerome Powell amid overheating risks. Or European Central Bank President Christine Lagarde struggling with a euro at 20-year lows. Or Bank of Japan Governor Haruhiko Kuroda confronted by a stagflation challenge no one saw coming.

Yet even amidst such disorientation, the dilemma facing PBOC Governor Yi looks the most challenging of all.

Until now, Yi’s team had tried to stick with a “stimulus-lite” strategy. Over the last two years, Yi’s team led President Xi Jinping’s assault on excessive leverage in the financial system. That meant adding liquidity here and there when needed but keeping a generally tight leash on the money supply.

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