The possibility for the People's Bank of China, the country's central bank, to implement a cut in the reserve requirement ratio soon is rising as commercial banks are poised to reprice their outstanding mortgages, which underscores the necessity of reducing banks' funding costs, experts said on Tuesday.

"The likelihood of an RRR cut in September is growing," said Lou Feipeng, a researcher at Postal Savings Bank of China. "Reducing the RRR can release long-term, low-cost funds and help effectively stabilize the liability costs of banks, who are guided to reduce the interest rates of outstanding mortgages.

Market rumors spread on Tuesday that the Bank of Communications, one of the country's five biggest banks, plans to hold a meeting on Wednesday to launch its plan of outstanding mortgage repricing, following the PBOC announcement in early August that it will guide commercial banks to adjust the interest rates of existing mortgages.

Hong Hao, chief economist at GROW Investment Group, said cutting interest rates on existing mortgages will put pressure on commercial banks' profit margins because their interest revenue will decrease. Cutting the RRR, which can help lower banks' funding costs, can help partially alleviate the pressure.

Lou added that financial markets have seen a rise in interest rates recently, reflecting a tight funding situation and the need for more liquidity support for banks. "Also, given the current domestic economic situation, supportive policies need to be launched sooner rather than later."