Zhaolian chief economist Dong Ximiao expects RRR and interest-rate cuts in Q3.
If H2 economic recovery momentum weakens, the policy rate could be trimmed 10-20
bps; but with commercial banks’ net interest margins near 1.40%—a historic
low—LPR has limited downside, likely 5-10 bps. On RRR, to accommodate
concentrated fiscal bond issuance and keeps banking-system liquidity reasonably
ample, there is 25-50 bps of cut space this year; implementation could be timed
to bond-supply peaks or liquidity-tight episodes. The PBOC will rely more on
structural monetary tools, step up timely liquidity management, and expand
targeted support for tech innovation, consumption and small- and
micro-enterprises.
