In 2022, the rate hike policy was initially implemented gradually, with a 25 basis point increase at the beginning, but a sudden 50 basis point increase in May or June caused market volatility and triggered the crisis of Luna collapse.
If a similar strategy is adopted on September 18, 2024, the rate will be cut by 25 basis points 1 or 2 times, and then suddenly cut by 50 basis points, which may also trigger market panic and recession.
Therefore, a more prudent policy strategy is to first cut the rate by 50 basis points at one time, then clearly give the policy path, explain that this is a preventive rate cut measure, and complete a total of 125 to 150 basis points of rate cuts by December. In this way, the market can quickly return to stability.