UOB Expects China's 7-Day Reverse Repo Rate to Drop by 30 Basis Points in 2025

According to UOB economist Ho Woei Chen, based on the messages from China's recent Central Economic Work Conference, it is likely that the country will provide more stimulus to revitalize its economy in 2025. Chen emphasized that fiscal policy will be more proactive and that the fiscal deficit will be raised to increase financial spending, indicating that this shows the fiscal deficit target may approach 4.0% of GDP, exceeding the implicit ceiling of 3.0%. UOB expects a reduction of 50-100 basis points in the reserve requirement ratio and an additional 30 basis points cut in the benchmark seven-day reverse repo rate in 2025.