The People’s Bank of China has injected ¥32 billion into the financial system through 7-day reverse repurchase agreements. The central bank maintained the interest rate for these operations at 1.40%. This move reflects a focus on maintaining market stability rather than implementing aggressive stimulus measures.
The current injection is relatively small compared to recent liquidity operations. For comparison, during the mid-September 2026 liquidity crunch, the PBOC injected ¥463.3 billion in a single day on September 18. This peak volume was approximately 14 times larger than the latest operation.
The PBOC utilizes reverse repos as a short-term lending mechanism to commercial banks. Under this arrangement, the central bank purchases securities from primary dealers with a commitment to sell them back after one week. The 7-day rate currently functions as the primary policy rate for the country.
In June 2026, the central bank introduced an overnight reverse repo instrument with a rate of 1.25%. This tool is intended to address short-term liquidity shortages that occur during tax payment periods at the end of months and quarters. It provides additional flexibility alongside the standard 7-day repo operations.
