China’s central bank, the People’s Bank of China (PBOC), has introduced overnight reverse repo operations to deepen its control over liquidity conditions and align its policy framework more closely with global peers.
The PBOC conducted overnight reverse repos in open market operations for the first time, offering 300 billion yuan ($44.10 billion) to financial institutions. The overnight reverse repo rate was set at 1.25%, 15 points below the seven-day tenor.
Impact on Liquidity Conditions
The introduction of the overnight reverse repo is expected to help the central bank better manage liquidity conditions and borrowing costs to aid the broader economy, especially at month- and quarter-end when money market rates tend to be volatile.
The volume-weighted average rate of the benchmark overnight repo traded in the interbank market was 1.3533% on Monday, down about 2 basis points from the previous close.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
