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<Research>CICC: PBOC's 'Structural Rate Cut' Not Imminently Imply Traditional Rate Cut; 10-bp Rate Cut Expected This Yr
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The People's Bank of China (PBOC) announced yesterday a 0.25-ppt reduction in interest rates for various structural monetary policy tools, along with five other related measures, adjusting the types and coverage, while increasing the quotas of these tools, CICC recaptured in its report. In terms of overall volume, the direct impact of this adjustment on asset prices is relatively limited, with the key being in its subsequent implementation. This policy adjustment reflects the characteristics of the current macro policy approach: maintaining a moderately loose overall stance while placing greater emphasis on structural adjustments, consistent with the Central Economic Working Conference’s emphasis on “quality and efficiency”. This approach may also be reflected in fiscal policy and the recent local Two Meetings. CICC pointed out that this “structural interest rate cut” is primarily structural and does not necessarily imply an imminent traditional interest rate cut. At press conferences, the PBOC typically announces both overall reserve requirement ratio (RRR) and interest rate cuts, as well as structural monetary policy adjustments, all at once, such as last May. At this press conference, the PBOC mainly announced interest rate cuts for structural monetary policy tools, without announcing traditional RRR and interest rate cuts. Meanwhile, the PBOC stated at the press conference that China's price level has recently shown positive changes, and the coordination effect of China's macroeconomic policies is constantly strengthening. Based on this information, CICC was inclined to believe that this policy adjustment is mainly structural, while maintaining a generally loose overall tone. Following the release of the information, treasury bond futures edged up before ebbing back. CICC's policy interest rate expectation index showed that current expectations for interest rate cuts are generally stable, with an expectation of around 10 bps for interest rate cuts throughout 2026. AASTOCKS Financial News Website: www.aastocks.com |
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