PBoC Skips Reverse Repos for First Time Since August 2024

The People’s Bank of China (PBoC) announced on Wednesday that it conducted zero reverse repo operations, citing primary dealers' funding needs in its open market operations. The move marked the first time since August 2024 that the central bank injected no liquidity through reverse repos, according to Reuters calculations. The absence of operations suggests that liquidity conditions in the banking system were deemed adequate, reducing the need for short-term cash injections by the PBoC.

The People's Bank of China conducted a CNY 118.6 billion seven-day reverse repo operation on Thursday, December 11, keeping the interest rate unchanged at 1.4%. With CNY 180.8 billion in reverse repos maturing the same day, the operation resulted in a net liquidity withdrawal of CNY 62.2 billion. Meanwhile, the Ministry of Finance announced it will roll over CNY 750 billion in special treasury bonds maturing on Friday. An equivalent amount will be issued to designated banks on the interbank market, comprising CNY 400 billion in 10-year bonds and CNY 350 billion in 15-year bonds. The proceeds will be used solely to repay the maturing principal. The ministry stressed that the rollover is a like-for-like replacement and will not expand the fiscal deficit.

The People’s Bank of China (PBOC) conducted CNY 487 billion (USD 68.56 billion) in seven-day reverse repos through open market operations on September 18, at an interest rate of 1.4%, unchanged from the previous period. With CNY 292 billion in seven-day reverse repos maturing on the same day, the central bank achieved a net injection of CNY 195 billion, continuing its efforts to inject liquidity into the banking system.The move came just hours after the US Federal Reserve’s decision to cut interest rates by 25 basis points. The seven-day reverse repo rate now serves as the economy's main policy rate. The PBOC last lowered the seven-day reverse repo rate by 10 basis points in May.