China: PBOC introduces overnight reverse repo but keeps rate undisclosed

Research evidence excerpt

China: PBOC introduces overnight reverse repo but keeps rate undisclosed

Economics Research

30 June 2026 | 10:04AM HKT

China: PBOC introduces overnight reverse repo but keeps rate

undisclosed

Bottom line: Xinquan Chen

+852-2978-2418 |

xinquan.chen@gs.com

The PBOC conducted its first RMB 300bn overnight reverse repo on June 29th and Goldman Sachs (Asia) L.L.C.

followed it with another RMB600bn operation on June 30th, while keeping the

operating rate undisclosed. The rate matters because the new tool could potentially

help guide DR001 and signal the PBOC’s stance on liquidity management. Media

reported a rate of 1.25% for the June 29th operation, below market expectations of

around 1.30%-1.35%, and market pricing appeared to reflect a dovish

interpretation. In our view, the overnight reverse repo looks more like a liquidity

provision tool at this stage, similar to outright repos and MLF loans. The PBOC’s

decision not to disclose the rate likely aims to preserve the 7-day reverse repo rate’s

role as the main policy rate and to avoid confusing the market before the new tool

becomes operationally mature. Funding indicators suggest interbank liquidity has

stayed ample. Lingering growth headwinds suggested by April-May activity data

argue for easy funding conditions. Lower oil prices introduce downside inflation risks.

Against this backdrop, we expect China cash yields and swap rates to move lower,

especially at the front end.

Main points:

1. What happened: As announced on June 25th, the PBOC introduced overnight

reverse repo operations on the morning of June 29th, with the first operation

totaling RMB300bn, and conducted another RMB600bn operation on June 30th.

Surprisingly, the PBOC did not disclose the operating rate, despite market