7月降息点评：货币政策空间逐渐打开

Monetary Policy Changes - The recent interest rate cut was 10 basis points (BP), which is consistent with previous cuts but may not be sufficient given current economic pressures[2]. - The 1-year Loan Prime Rate (LPR) is now 3.35%, and the 5-year LPR is 3.85%[6]. Economic Context - The actual GDP growth in Q2 was only 4.7%, significantly below the target of around 5% set at the beginning of the year, indicating a need for stronger counter-cyclical measures[12]. - PMI indicators for May and June were below pre-pandemic averages, reflecting weak internal economic momentum[21]. Policy Framework - The new monetary policy framework is characterized by the unchanged Medium-term Lending Facility (MLF) rate, while the 7-day reverse repurchase rate was adjusted to a fixed rate and quantity auction format[18][19]. - The shift in the operational framework suggests that the 7-day reverse repo rate is becoming the primary policy rate, diminishing the role of MLF in future monetary policy decisions[20]. Future Outlook - There is potential for 1-2 more rate cuts, totaling around 20 BP, to support the completion of annual growth targets[49][64]. - The market anticipates that the Federal Reserve may cut rates three times this year, which could further open up policy space for domestic monetary adjustments[12][46]. Risks - Risks include the possibility that fiscal and monetary policy measures may not be as effective as expected, and that the pace of Federal Reserve rate cuts may not align with market expectations[29].