PBOC Likely To Cut Interest Rate, RRR In 2024

The People’s Bank of China will likely cut interest rates and the reserve requirement ratio next year to keep the growth rate of M2 and social financing at a high level, while the Central Economic Work Conference indicated monetary policy will need to support the rebound of prices and the return to the potential growth level. The conference said in a statement Tuesday that “the scale of social financing and money supply should match with the expected goals of economic growth and price levels,” given that low prices this year have resulted in a large deviation between social financing growth and the nominal GDP growth. China’s current potential growth is about 5.5%, and the price target in recent years is circa 3%, which means the growth rate of social financial and M2 should be 8.5% or higher. (Source: 21st Century Business Herald)