China Policy Rate Cut of 10-20bps Expected in Q3 Amid RRR Reduction Outlook

Economists forecast a Q3 rate cut of 10-20bps and further RRR reductions of 25-50bps, with PBOC likely deploying structural tools to manage liquidity during bond supply peaks.

Woofun AI reports that Zhailian Chief Economist Dong Ximiao anticipates reserve requirement ratio and interest rate cuts in the third quarter. A policy rate reduction of 10 to 20 basis points remains possible if economic recovery momentum weakens in the second half of the year. Regarding the reserve requirement ratio, an additional cut of 25 to 50 basis points is feasible within the year, potentially timed with peak bond supply or tight liquidity periods. The People's Bank of China is expected to increasingly employ structural monetary policy tools to regulate market liquidity.