Emerging Insight: China: PBoC liquidity operations and CGB outlook

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Emerging Insight: China: PBoC liquidity operations and CGB outlook

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Emerging Insight

China: PBoC liquidity operations and CGB

outlook

Key takeaways 14 July 2026

GEM Fixed Income Strategy &• PBoC introduced overnight reverse repo operation in end-June, but refrained from

Economics sending any policy-rate signals.

Global

• The central bank also adjusted the rates on temporary OMO, making the interest-rate

corridor narrower and more symmetric. Janice Xue

Emerging Asia FI/FX Strategist

• We expect ample liquidity and see downside risk to the 10y yield in 2H given the soft Merrill Lynch (Hong Kong)

macro backdrop. +852janice.xue@bofa.com3508 8587

David Hauner, CFA >>

By Janice Xue GlobalMLI (UK)EM FI/FX Strategist

david.hauner@bofa.com

Exhibit 1: PBoC narrowed the width of its soft interest-rate corridor

Policy rate, temporary OMO rates, and market repo rates Claudio Irigoyen Global Economist

BofAS

DR007 claudio.irigoyen@bofa.com

% DR001 See Team Page for List of Analysts

2.5 temporary o/n repo rate

temporary o/n reverse repo rate

7d policy rate 2.0

Glossary

1.5 CGB: China Government Bond

CPI – Consumer price index 1.0

DR001: weighted average of

interbank overnight pledged repo 0.5

rate of depository institutions

Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26 DR007: weighted average of

interbank 7-day pledged repo rate of

Source: Bloomberg, PBoC, BofA Global Research depository institutions BofA GLOBAL RESEARCH

China in Focus GDP: Gross domestic products

The PBoC has continued to recalibrate its liquidity-operations framework. The latest MLF: Medium-term Lending Facility

measures include introducing overnight reverse repo operations and narrowing the

interest-rate corridor.