Morgan Stanley states that the accelerated MMF easing in China should help implement existing stimulus measures ahead of schedule in the next two months.
According to the Zhito Finance APP, Morgan Stanley released a Research Report stating that the People's Bank of China and other local departments introduced a new round of MMF easing measures this morning (the 7th), slightly exceeding market expectations, and indicated that there is room for further easing if necessary. This reflects Peking's intention to show support for domestic market confidence ahead of Sino-U.S. negotiations. Morgan Stanley believes that the accelerated MMF easing in China should help implement existing stimulus measures ahead of schedule in the next two months, and it is estimated that Peking will announce a supplementary fiscal plan of 1 trillion to 1.5 trillion yuan in the second half of this year to partially offset tariff impacts.
The bank indicated that the major measures introduced by the central bank and other departments include: 1) A 50 basis points reserve requirement cut, releasing 1 trillion yuan of long-term liquidity into the market; 2) A policy interest rate cut of 10 basis points to 1.4%; structural monetary policy tools (re-lending, policy financial bonds) and personal housing provident fund loan rates cut by 25 basis points; 3) An increase in the re-lending quota by 1.1 trillion yuan, including: initial quotas of 500 billion yuan for consumer services and the CSI Old-Age Industry Index; an increase of 300 billion yuan for technological innovation; and an expansion of 300 billion yuan for agriculture and small enterprises; 4) Two facilities combined with a quota of 800 billion yuan to support the stock market, indicating a more flexible usage approach.
