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China's central bank is highly likely to announce interest rate cuts or reserve requirement ratio (RRR) cuts in the second half of the year to fuel an economic recovery due to blows stemming from COVID-19 amid external uncertainties, Chinese experts predicted, while reading into monetary policy related lines of this year's Government Work Report.

The People's Bank of China (PBC) is very likely to announce more interest rate cuts, RRR cuts and rediscount policies in the next half of the year as to secure ample liquidity and support enterprises for China's economy, Yu Miaojie, deputy dean of the National School of Development at Peking University, told the Global Times on Saturday.

The cuts are most likely to be made on interest rates for the standing lending facility (SLF) and RRR, which would form a low interest rate range for market interests to fluctuate in, Yu said.

China will use a variety of tools including reserve requirement ratio cuts, interest rate reductions and re-lending to enable M2 money supply and aggregate financing to grow at notably higher rates than last year, read the Government Work Report submitted to the national legislature for deliberation on Friday.

It is crucial to take steps to ensure enterprises can secure loans more easily, and promote steady reduction of interest rates, said the report.

As noted in the report, China's counter-cyclical adjustments regarding monetary policy won't yet hit the brakes. This is beyond many market analysts' expectations, said Lian Ping, chief economist at Zhixin Investment.

To shore up the economy, the PBC cut RRR by 0.5 percentage points on January 6, bringing the level for big banks down to 12.5 percent and releasing around 800 billion yuan ($114.91 billion) in funds.

This year's report clearly noted it's necessary to continue to make interest rates go down. The PBC use various tools to guide financing interest rates down, Lian said, adding that when necessary, the central bank may even lower the deposit benchmark interest rate to relieve the cost pressure of commercial banks.

According to Zhixin's estimation, 2 more trillion yuan will be released in every 1 percentage point in further RRR cuts.

Easing monetary-based stimulus policies are no doubt in need both in the short term bailout or following recovery from the viral blow, Zheng Chaoyu, a professor of monetary policy with the School of Economics at Renmin University of China, told the Global Times.

China's current monetary policy is still "tight" compared with global monetary policies and conditions, said Zheng. "In some developed countries' easing monetary conditions, RRR had essentially lost sense and they were already in zero or in negative interest territory even before the COVID-19 outbreak began."

In terms of supporting fiscal measures, RRR cuts could provide more money for commercial banks to buy national or local special bonds, Zheng added.