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"Prudent monetary policy should be precise and forceful, with greater emphasis on cross-cyclical and countercyclical adjustments, enriching the monetary policy toolbox," the bank said.

"We expect the July Politburo meeting statement to continue emphasising 'countercyclical adjustment' of monetary policy and 'more proactive' fiscal policy," economists at Goldman Sachs said in a note.

By generating jobs in construction, public housing development acts as a countercyclical stimulus measure, boosting employment in a critical sector with significant multiplier effects across the entire economy.

"There are situations that demand countercyclical actions ... but we are not at a moment when fiscal expansion will help the economy," he said in an interview with TV channel GloboNews.

Despite the downturn, the Bundesbank argued that it was not yet time for the country's financial regulator to release a so-called countercyclical capital buffer - extra capital, built up during better times, to be used up during a slump.