Galaxy Securities: may cumulatively reduce the policy Intrerest Rate by 30-40BP throughout the year

Jinshi data, February 28th, Galaxy Securities pointed out that the moderate easing orientation remains unchanged, but the pace of interest rate cuts may change, and another rate cut needs to wait. The orientation of monetary policy in 2025 is still fundamentally oriented towards moderate easing. The space for interest rate cuts and reserve cuts throughout the year still exists. The policy interest rate (7-day reverse repo interest rate) may be reduced by 30-40BP throughout the year, guiding the 5-year LPR down by 40-60BP. The reserve requirement may be reduced by 100-150BP throughout the year. The central bank's open market national debt may have a net purchase of over 2 trillion yuan throughout the year. The interest rate cut window may gradually open after the expectation of a rate cut by the Fed in the second quarter is reignited. Reserve cuts and repurchase-style reverse repurchase will be important tools to release medium- and long-term liquidity. At the same time, reserve cuts can save bank costs and support credit expansion. The probability of landing in the first quarter is still relatively high. We predict that in 2025, the annual fluctuation range of the 10-year government bond yield is 1.5%-1.9%. If the central bank cuts the policy interest rate by 40BP throughout the year, according to our calculations, 1.64% may be a relatively reasonable level. The Exchange Rate of the US dollar against the RMB may fluctuate around 7.3.