PBOC to run overnight reverse repos Oct 21-Nov 2, up to 1 trillion yuan a day

The People's Bank of China announced on 20 October that it will conduct overnight reverse repo operations from 21 October to 2 November. The operations will use a fixed rate and quantity bidding, with a daily operation amount of no more than 10,000 billion yuan. CLS and Jiemian News quote the announcement as saying the aim is to better match the short-term liquidity needs of the banking system. [ 1 , 2 , 3 , 4 ]

Jiemian News said the announcement covers nine consecutive working days, a markedly longer run than the four consecutive working days in each announcement since July. Wang Qing, chief macro analyst at Dongfang Jincheng (东方金诚), told the outlet that the October tax period was pushed back by the long Shiyi (十一) holiday and overlaps with month-end, which raised the number of days. He also said it shows a gradual rise in the frequency of overnight reverse repo operations, reflecting a growing role for them in the central bank's open market operations. [ 4 ]

Wang said the unchanged daily cap of 10,000 billion yuan can fully meet financial institutions' large short-term funding needs when the tax period and month-end coincide. He said it would guide the short-term money market rate DR001 to move steadily around the policy rate and help control its swings. [ 4 ]

Jiemian News linked the announcement to remarks on 19 October at the opening of the 2026 Financial Street Forum annual meeting. There, People's Bank of China governor Pan Gongsheng said the bank would study switching the tenor of its main open market operations to overnight at a suitable time, so that the overnight repo rate in open market operations would become the main policy rate. He also said the transformation of the monetary policy framework is a gradual, continuing process that the bank will keep assessing and improving. [ 4 ]

According to Jiemian News, overnight reverse repos were created in June this year and first operated at the end of June. Frequency then rose, with operations also at mid-month and the start of the month, and operation sizes grew. The outlet said the central bank and primary dealers have gained experience with them, which provides a basis for changing the policy rate anchor. China Galaxy Securities said in a research report that the overnight repo rate will become an important pricing benchmark, and that attention should turn to policy guidance from the central bank and improvements to the loan prime rate quoting mechanism. [ 4 ]