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CN Media: Analysts Expect Interest Rate & RRR Cuts in 2Q, Predict RRR Cut to Land First
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Given changes in the external trade environment at the moment, as well as the property market and price trends in Mainland China, the timing for “timely rate and reserve requirement ratio (RRR) cuts” in 2Q25 is ripe, Securities Daily cited Wang Qing, Chief Macro Analyst at Golden Credit Rating. Wang projected a rate cut of 0.3 ppts and an RRR cut of 0.5 ppts, which may unleash RMB1 trillion of long-term liquidity. Wen Bin, Chief Economist at China Minsheng Bank, believed that RRR cuts, as a tool to release long-term liquidity, remain the top resort. With fiscal policy expected to loosen in 2Q25, an RRR cut is likely to be implemented first. Interest rate cuts, however, may face constraints from RMB exchange rates and banks’ NIMs. While a weaker USD reduces exchange rate pressures, NIM concerns persist. Wen suggested that rate reductions may proceed in stages: first lowering interest rates on structural monetary policy tools, followed by the 7-day reverse repo rate, and then the loan prime rate (LPR). AAStocks Financial News |
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