Market Expects Central Bank Reserve Requirement Cut and Interest Rate Reduction around the Spring Festival, Focus on MLF Rate Changes on January 15

The period around the Spring Festival has always been an important time for the central bank to cut reserve requirements and interest rates. Recently, there has been a significant rebound in the 10-year treasury bond futures, causing the yield on the 10-year treasury bond to exceed 2.5% again. This indicates a growing market demand for the central bank to further increase macroeconomic policy measures. On January 15, the central bank will conduct the first Medium-term Lending Facility (MLF) operation for 2024, and the market is particularly concerned about changes in the MLF interest rate. Professionals believe that by proactively and fully implementing macroeconomic policies, economic growth can be significantly stabilized, boosting market confidence. Regarding the reserve requirement cut and interest rate reduction, several experts suggest that, considering the current demand for economic recovery and the situation of real interest rates, an interest rate cut in the first quarter is very necessary, and there is a high probability of implementation in January. In addition, in coordination with pre-issuance of government bonds and an increase in credit issuance, a reserve requirement cut may also be implemented, but the timing could be later.