In a recent statement, a central bank official from China mentioned that there is still potential to decrease the reserve requirement ratio (RRR) for banks, signaling ongoing support for economic recovery efforts. This move comes after a 50-bps RRR cut earlier this year to stimulate growth, which has had some positive impact. However, with the economy growing slower than expected, additional measures may be needed to address challenges such as a property downturn and weak domestic demand.
Goldman Sachs forecasts a possible 25-bps RRR cut in September and a 10-bps policy rate cut in the fourth quarter, indicating a proactive approach by policymakers to address the current economic conditions. With manufacturing activity hitting a six-month low in August, there is pressure to provide more stimulus to households and support overall growth. As an investor, staying informed about these developments can help make better financial decisions and navigate potential market changes.
