■ In the process of inflationary pressures arising from non-policy demand factors after COVID-19, model estimates suggest that fiscal policy exerted upward pressure on prices in 202223, while monetary policy has applied downward pressure since 2023.

- Rapid base rate hikes since H2 2022 have contributed to price stabilization, whereas the sustained expansive fiscal stance at a relatively high level continued to exert upward pressure through 2023.

- Although inflation begin to decelerate in 2024, the sustained high interest rate environment continues to exert downward pressure on prices.

■ With moderation in inflation expected to continue, corresponding adjustments to the macroeconomic policy stance would be advisable.

- Since the lagged effect of non-policy demand factors diminishes if no additional shocks occur, the disinflationary trend may persist in the near term.

- Therefore, the intensity of monetary tightening should be carefully calibrated to prevent inflation from remaining below the target for an extended period, and fiscal policy warrants caution considering the already elevated level of government expenditure.