The central bank: Conducted 800 billion yuan of outright reverse repurchase operations

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Source: Economic Information Daily

The People’s Bank of China (hereinafter referred to as “PBOC”) recently released an announcement. On April 7, the PBOC carried out a 800 billion yuan (RMB) billion buyout-style reverse repo operation through fixed-amount bidding, rate bidding, and a multi-price winning approach. The term is 3 months (89 days), and the maturity date is July 5, 2026.

The data show that in April, 11,000 billion yuan in 3-month buyout-style reverse repos will mature, meaning that during the month, 3-month buyout-style reverse repos were reduced in volume and rolled over on a smaller scale, with a reduced amount of 3,000 billion yuan. In addition, since April, the PBOC has also conducted “low-volume” reverse repo operations consecutively on April 1, April 2, and April 3.

“We believe that the continued reduction in volume of the 3-month buyout-style reverse repo rollovers, consistent with the recent consecutive ‘low-volume’ operations in the open market, is mainly due to market liquidity being somewhat loose since early April.” Wang Qing, Chief Macroeconomic Analyst at Oriental Jincheng, said.

Wang Qing said that recently, the overnight pledged repo rate for deposit-taking financial institutions (DR001) has been operating with an average of less than 1.3% on a monthly basis. On April 2, the one-year term interbank certificate of deposit yield of commercial banks (AAA-rated) fell below 1.5%, reaching a historical low; all of these are at relatively clearly low levels. Behind this are mainly factors such as the PBOC’s large-scale net injection of 19,000 billion yuan of mid-term liquidity through the Medium-Term Lending Facility (MLF) and buyout-style reverse repos combined from January to February, as well as a lower net financing scale for government bonds in March.

Song Qi, an analyst at Huachuang Securities, further analyzed and pointed out that since March, buyout-style reverse repos have gradually shifted from net injection to net withdrawal, marking the first time since June 2025. The maturities of 6-month buyout-style reverse repos and MLF during mid-April and end-April both are 6,000 billion yuan. Given that current financial institutions have limited demand for PBOC liquidity, it is not ruled out that the state of reduced-volume injection may continue.

“Near-term funding conditions may continue to be loose. Any funding shortfall may become apparent in late April. If the PBOC’s operations remain restrained, it is not ruled out that the funding price could move slightly upward at the margin.” Song Qi said.

Lin Yahang, an analyst in the macro strategy department of Southern Fund, said that in this round, the PBOC conducted an advance announcement of a 800 billion yuan 3-month buyout-style reverse repo operation. Overall, this reflects strong foresight and the ability to manage timing and pace. In general, against the backdrop of marginal improvement in current economic fundamentals, the PBOC’s operations place greater emphasis on “stability without looseness, and loosening with appropriate limits.” Through precise hedging and a combination of structural tools, it maintains liquidity that is reasonably abundant without being overly loose, leaving room for subsequent policy actions.

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Editor: Gao Jia