PBoC Moves to Strengthen Rate Framework

2026-06-17 05:28 By Farida Husna 1 min. read

The People's Bank of China announced on Wednesday several measures to improve its short-term interest rate framework, signaling a possible shift toward using the overnight policy rate as its main benchmark instead of the current seven-day reverse repo rate.

Governor Pan Gongsheng said the central bank will narrow the interest rate corridor for its temporary overnight repo and reverse repo facilities while increasing overnight reverse repo operations.

He said further that the central bank is developing tools to provide emergency liquidity to non-bank financial institutions during times of market stress.

Chinese authorities also rolled out new measures to promote the yuan's international use, including a repo facility allowing foreign monetary authorities and sovereign wealth funds to access yuan liquidity using bonds as collateral, alongside a pilot program for offshore yuan foreign exchange trading in the Shanghai Free Trade Zone.



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PBoC Moves to Strengthen Rate Framework
The People's Bank of China announced on Wednesday several measures to improve its short-term interest rate framework, signaling a possible shift toward using the overnight policy rate as its main benchmark instead of the current seven-day reverse repo rate. Governor Pan Gongsheng said the central bank will narrow the interest rate corridor for its temporary overnight repo and reverse repo facilities while increasing overnight reverse repo operations. He said further that the central bank is developing tools to provide emergency liquidity to non-bank financial institutions during times of market stress. Chinese authorities also rolled out new measures to promote the yuan's international use, including a repo facility allowing foreign monetary authorities and sovereign wealth funds to access yuan liquidity using bonds as collateral, alongside a pilot program for offshore yuan foreign exchange trading in the Shanghai Free Trade Zone.
2026-06-17
PBoC Continues Zero Reverse Repo Operations
The People's Bank of China (PBoC) left its daily liquidity injections unchanged at zero for a second consecutive session on Thursday, following the first suspension of seven-day reverse repo operations in nearly two years a day earlier. The central bank said the zero-volume operation reflected the needs of primary dealers in open market operations. The move has drawn market attention as it comes despite ample liquidity in the banking system. The consecutive zero operations suggest policymakers are comfortable with current funding conditions and see no immediate need to inject additional cash into the financial system.
2026-06-04
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.
2026-06-03