Overview
- The People’s Bank of China executed its first overnight reverse repo on Monday, June 29, offering 300 billion yuan to banks as a short‑term liquidity injection.
- The central bank also injected 157.5 billion yuan through seven‑day reverse repos and kept the seven‑day rate unchanged at 1.40%.
- The PBOC did not publish the overnight rate; Reuters sources reported the inaugural rate at 1.25% and interbank trading showed a volume‑weighted overnight repo average near 1.3533%.
- Governor Pan Gongsheng previously signalled the move as part of a plan to compress the short‑term rate corridor from about 70 basis points to 50 basis points to reduce month‑end liquidity spikes and improve rate transmission.
- The overnight tool gives the central bank finer control over daily funding costs and should smooth short‑term volatility for banks and borrowers while the seven‑day rate retains its primary signalling role.