China's economy rebounded faster than expected in the first quarter but lost momentum at the beginning of the second. The economy is grappling with a high unemployment rate, a sluggish real estate market and rising geopolitical tensions.
Zhang Ming, a researcher at the Chinese Academy of Social Sciences, a top government think tank, told the state newspaper that low inflationary pressures in China will provide room for monetary easing.
China can consider further rate cuts and target the reserve requirement ratio (RRR) cuts to lower lending costs, said Zhang.
Li Chao, chief economist at Zheshang Securities, also expects potential rate cuts and RRR cuts in the second half of this year, the report said. He expects the U.S. Federal Reserve may enter the rate-cutting cycle in the fourth quarter, giving further room for Beijing to ease monetary policy.
China in March cut the RRR for the first time in 2023, but has kept its benchmark lending rate unchanged this year, as widening yield differentials with the United States limited the scope for substantial monetary easing.
(Reporting by Ziyi Tang and Ryan Woo; Editing by Shri Navaratnam)
