Zheshang Securities Chief Macro Analyst Lin Chengwei: expects a 25–50BP RRR cut operation by 2026

Today, Lin Chengwei, Zhisang Securities’ chief macro analyst, provided an interpretation of the Government Work Report. He said that compared with the wording in this year’s Two Sessions in 2025—“appropriately reduce reserve requirement ratios and interest rates in a timely manner, and optimize and innovate structural monetary policy tools”—this year’s incremental changes lie in two points. First, the wording has been upgraded from “appropriately” to “flexibly and efficiently using,” which means the policy will not mechanically wait for a single trigger condition, but will instead place greater emphasis on tool combinations and operational efficiency. It is expected that in 2026 there will be a total, broad-based loosening operation of 25—50 BP in reserve requirement ratio cuts and 10 BP in interest rate cuts; in terms of pace, it is expected to be like a small-step slow jog, with frequency not too high. Second, it clearly calls for increasing the scale and improving the ways of structural tools, indicating that structural tools will move from shoring up weak links to providing a broader coverage and stronger incentive-and-constraint effects. By providing more favorable funding prices, more usable collateral and credit-enhancement arrangements, and risk-sharing mechanisms, it will help funds flow more smoothly into key areas such as technology innovation, green transformation, consumption and eldercare, and private-sector small and micro businesses. This, in turn, will enhance the accessibility and effectiveness of credit allocation during periods when demand is relatively weak. (People’s Finance and News)