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UBS Expects CN to Cut Rates Again in 2H25, Roll Out Additional Fiscal Stimulus Between Late 2Q and Early 3Q
Tao Wang, Head of Asia Economic Research and Chief China Economist at UBS, anticipated the Chinese government to further cut interest rates and introduce incremental fiscal stimulu...
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UBS Expects CN to Cut Rates Again in 2H25, Roll Out Additional Fiscal Stimulus Between Late 2Q and Early 3Q
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Tao Wang, Head of Asia Economic Research and Chief China Economist at UBS, anticipated the Chinese government to further cut interest rates and introduce incremental fiscal stimulus in 2H25.

In Wang's estimate, the central bank may lower policy rates by another 20-30 bps in 2025, while broad fiscal support (an expanded fiscal deficit ratio) will need to be expanded by an additional 1.5-2 ppts of GDP on top of the Two Sessions' policy support. Meanwhile, funding could be provided through new issuances of special government bonds, the establishment of relending tools, and/or policy bank financial instruments.

Related NewsPPI YoY for Apr in China is -2.7%, lower than the previous value of -2.5%. The forecast was -2.6%.
As the Chinese government may need to assess the impact of tariff shocks and accelerate the implementation of public spending already included in the fiscal budget over the next 2-3 months, it is possible that new fiscal stimulus measures will not be launched immediately, Wang noted. China may roll out new additional fiscal stimulus again in late 2Q or early 3Q.

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