Strong stimulus measures boost sentiment – UOB Group

The People’s Bank of China (PBOC), the China Securities Regulatory Commission (CSRC) and the National Financial Regulatory Administration (NFRA) announced a series of stimulus measures in a joint briefing on Tuesday (24 September). The PBOC doubled down on its monetary policy easing by cutting both interest rates and banks’ required reserve ratio (RRR), notes UOB Group economist Ho Woei Chen.

Growth to moderate and more, up to 4.6% in 2025

“China announced a series of stimulus measures to boost its economy on Tuesday (September 24). The PBOC doubled down on its monetary policy easing by cutting both the 7-day reverse repo rate and the banks’ reserve requirement ratio (RRR).”

“China’s latest measures, including for the housing market, were broadly in line with what analysts had called for, although the extent of monetary policy easing exceeded expectations. Taking into account the 20bp cut in the 7-day reverse repo rate announced today, we expect the 1Y and 5Y LPR to be reduced to 3.15% and 3.65% respectively by the end of 2024 .”

“The latest set of stimulus measures is likely in response to further deterioration in China’s macroeconomic data since August, but may not be enough to reverse the decline in China’s housing market. We maintain our GDP growth forecast for China at 4.8% for 2H24, with full-year GDP at 4.9%, after accounting for 5.0% growth for 1H24. After that, we expect growth to moderate further to 4.6% in 2025.