Galaxy Securities pointed out that the moderate easing bias remains unchanged, but the pace of rate cuts may change, and further rate cuts may need to wait. The orientation towards moderate easing in 2025 is still the basic narrative, with room for rate cuts and reserve requirement cuts throughout the year, with a possible cumulative adjustment of policy interest rates (7-day reverse repo rate) by 30-40 basis points, guiding the 5-year LPR to decrease by 40-60 basis points. There may be a total reduction of 100-150 basis points in reserve requirements throughout the year. The Central Bank's open market purchases of government bonds may exceed 2 trillion yuan for the whole year. The rate cut window may gradually open after the market expects the Fed to cut rates in the second quarter. Reserve requirement cuts and repurchase agreements will be important tools to release medium and long-term liquidity, while reserve requirement cuts can save bank costs, support credit expansion, and the probability of implementation in the first quarter remains high. We predict that in 2025, the annual fluctuation range of the 10-year government bond yield will be between 1.5% and 1.9%. If the Central Bank cuts policy interest rates by 40 basis points throughout the year, according to our calculations, 1.64% may be a relatively reasonable level. The exchange rate of the US Dollar against the Chinese Yuan may fluctuate around 7.3.
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Galaxy Securities pointed out that the moderate easing bias remains unchanged, but the pace of rate cuts may change, and further rate cuts may need to wait. The orientation towards moderate easing in 2025 is still the basic narrative, with room for rate cuts and reserve requirement cuts throughout the year, with a possible cumulative adjustment of policy interest rates (7-day reverse repo rate) by 30-40 basis points, guiding the 5-year LPR to decrease by 40-60 basis points. There may be a total reduction of 100-150 basis points in reserve requirements throughout the year. The Central Bank's open market purchases of government bonds may exceed 2 trillion yuan for the whole year. The rate cut window may gradually open after the market expects the Fed to cut rates in the second quarter. Reserve requirement cuts and repurchase agreements will be important tools to release medium and long-term liquidity, while reserve requirement cuts can save bank costs, support credit expansion, and the probability of implementation in the first quarter remains high. We predict that in 2025, the annual fluctuation range of the 10-year government bond yield will be between 1.5% and 1.9%. If the Central Bank cuts policy interest rates by 40 basis points throughout the year, according to our calculations, 1.64% may be a relatively reasonable level. The exchange rate of the US Dollar against the Chinese Yuan may fluctuate around 7.3.