Fang Zheng Fubon Qu Decheng: Interest rate cuts are beneficial for stabilizing market expectations.

Fang Zheng Fubon Fund manager Qu Deceng believes that lowering the reserve requirement ratio and interest rates can effectively complement further fiscal efforts. Although the large-scale debt replacement has reduced the financing costs of local governments, considering the rapid growth of government bond issuance this year, it is still possible for the fiscal policy to further escalate. The pressure of government bond interest payments will squeeze the space for fiscal expenditure, and the interest rate cut and corresponding loose monetary environment are beneficial for reducing the financing costs of the government. Qu Deceng stated that under the pressure of stabilizing growth, stabilizing the exchange rate will alleviate the constraints on interest rate cuts. Previously, the central bank was constrained by the requirements to stabilize the exchange rate, prevent risks, and prevent capital flight. Now, with the appearance of pressure on stabilizing growth, the main task of the central bank will shift to stabilizing growth. Meanwhile, the significant decline in the US dollar index has also opened up some space for interest rate cuts. Lowering interest rates and moderate depreciation of the exchange rate are both loosening measures of monetary policy, which are conducive to stabilizing market expectations.