Expert Expected to Cut Rates 1-2 Times in H2, New Policy Tools in Pipeline

Chinese economists anticipate further monetary easing in the second half of 2025, with 1-2 interest rate cuts totaling 20-30 basis points to support domestic demand and stabilize foreign trade amid global uncertainties, according to industry experts139.

Key Policy Expectations

Rate Cuts:

20-30 bps reduction in policy rates to guide LPR (loan prime rate) lower

Aims to lower borrowing costs for businesses and households

Follows May’s 10 bps cut in both 1-year and 5-year LPR59

New Policy Financial Tools:

Pilot program allowing policy banks to issue financial bonds

Funds to support tech innovation, foreign trade via equity investments

Estimated ¥500B–¥1T in funding this year139

Market & Economic Context

External Pressures: U.S. tariff hikes and Fed policy shifts weigh on China’s trade outlook7

Domestic Needs: Weak property market and subdued consumption require stimulus5

Banking Sector: Net interest margins at 1.43% (Q1 2025), limiting aggressive rate cuts5

Next Steps:

Further RRR cuts possible (current avg. 6.2%)59

Structural tools like tech re-lending quotas may expand9

"Policy must balance growth support with financial stability" — Analysts warn against over-reliance on rate cuts alone59.