China central bank injects 662.5 billion yuan via 7-day reverse repos at 1.40%, unchanged from prior

The People’s Bank of China (PBoC) injected 662.5 billion yuan into the financial system through 7-day reverse repurchase agreements at an unchanged rate of 1.40 percent, aligning with the previous rate set in May 2026. This operation is part of the central bank’s ongoing efforts to maintain adequate liquidity in the banking system while managing short-term interest rates within a controlled corridor.

The 1.40 percent rate marks a historic low for the 7-day reverse repo rate, which has averaged 2.46 percent since 2012. Analysts project the rate to decline further to 1.30 percent by the end of the current quarter, with a long-term stabilization expected around 1.50 percent in 2027. Recent policy discussions have highlighted a potential shift toward using the overnight reverse repo rate as a primary benchmark, signaling refine the central bank’s control over short-term liquidity and interest rates.

Despite the large injection, the PBoC has also conducted consecutive zero-volume reverse repo operations in recent sessions, indicating that liquidity conditions are currently deemed sufficient. These mixed signals suggest a cautious approach by policymakers, balancing the need for market stability with the avoidance of excessive stimulus.