Recently, the Monetary Policy Committee of the People's Bank of China held a regular meeting in the fourth quarter of 2024, at which the main ideas of monetary policy in the next stage were studied and suggestions were made to increase the intensity of monetary policy regulation, improve the foresight, pertinence and effectiveness of monetary policy regulation, and reduce the reserve ratio and interest rate at the right time according to the economic and financial situation at home and abroad and the operation of financial markets. The meeting pointed out that "it is recommended to increase the intensity of monetary policy regulation, improve the forward-looking, targeted, and effective nature of monetary policy regulation." Zhong Linnan, a senior macro analyst at Guangfa Securities, analyzed that the statement of "improving the accuracy of monetary policy regulation" in the third quarter will be changed to "improving the forward-looking, targeted, and effective nature of monetary policy regulation. It is the implementation of the spirit of the Central Economic Work Conference to enhance the forward-looking, targeted, and effective macroeconomic regulation. He pointed out that "precision" emphasizes targeting desirable structural areas, making precise efforts, and generally emphasizing "flexibility, moderation, precision, and effectiveness" during the period of prudent monetary policy; And 'forward-looking' corresponds to early detection of problems and walking ahead of the market curve; Targeted "corresponds to identifying the crux of the problem and increasing the intensity of regulation in established areas; 'Effectiveness' corresponds to achieving the transmission goal of monetary policy and effectively influencing macro and micro expectations. For the dual functions of monetary policy aggregate and structure, the emphasis on "forward-looking, targeted, and effective" demonstrates a greater emphasis on aggregate targets. In addition, the meeting also clarified that "based on the domestic and international economic and financial situation and the operation of financial markets, reserve requirement ratio cuts and interest rate cuts should be made at the appropriate time." Yuan Ye, Chief Macro Analyst of China Post Securities, said that this meeting once again clarified the "timing of reserve requirement ratio cuts and interest rate cuts," but emphasized that "based on the domestic and international economic and financial situation and the operation of financial markets," reference conditions were attached to reserve requirement ratio cuts and interest rate cuts. The timing of reserve requirement ratio cuts and interest rate cuts reflects that a moderately loose monetary policy is not unrestrained. In the short term, reserve requirement ratio cuts and interest rate cuts may be constrained by the decline in long-term domestic yields and the depreciation of the renminbi against the US dollar. Tao Chuan, Chief Economist of Minsheng Securities, pointed out that reserve requirement ratio cuts and interest rate cuts still rely on the adjustment of the RMB exchange rate entering a "window period". Secondly, it is even more crucial to exert fiscal power at the beginning of the year, and monetary easing needs to be coordinated with it. It is expected that the reserve requirement ratio reduction will not wait too long, and the next window may be in January. For the real estate sector, this meeting proposed to "increase the vitality of existing commodity housing and land, promote the stabilization of the real estate market, improve the basic financial system of real estate, and help build a new model for real estate development." Zhang Di, Chief Macro Analyst of China Galaxy Securities, believes that there have been many marginal changes in the expression of the real estate market in this meeting, emphasizing the efforts to promote the implementation and effectiveness of financial policy measures that have been introduced, and adding emphasis on increasing the vitality of existing commodity housing. This means that on the one hand, the support policies already introduced for the real estate market are expected to accelerate their implementation, and on the other hand, the central bank can also create new tools in the future to support the revitalization of existing commercial housing. Looking ahead to the monetary policy in 2025, Zhang Di stated that the monetary policy orientation will be moderately loose, and the expected rate of interest rate cuts and reserve requirement ratio cuts for the whole year of 2025 may increase. It is expected that the policy interest rate (7-day reverse repo rate) may be reduced by 40-60BP throughout 2025, leading to a decline of 60-100BP in the 5-year LPR. The cumulative reserve requirement ratio may be reduced by 150-250BP throughout the year. The cumulative net purchase of treasury bond in the open market of the Central Bank was more than 2 trillion yuan. (New Society)