Full Breakdown
China Keeps Overnight Reverse Repo Rate Steady as Liquidity Injection Continues
7/29/2026, 12:57:41 PM
Core Event: Overnight Reverse Repo Operation on July 29
On July 29, the People’s Bank of China (PBOC) conducted an overnight reverse-repo operation, setting the borrowing cost at 1.25%—the same rate used in the late-June operation. The central bank injected 206.5 billion yuan through seven-day reverse repos at a rate of 1.40% and added an additional 600 billion yuan via the overnight tenor, though the borrowing cost for the latter was not disclosed. The PBOC did not immediately respond to a request for comment.
Data & Statistics
- Overnight rate: 1.25% (unchanged from late June).
- Seven-day repos: 206.5 billion yuan at 1.40%.
- Overnight injection: 600 billion yuan (rate undisclosed).
- Planned total injection: 2.1 trillion yuan across operations scheduled for July 29-31 and August 3.
Official Statements & Responses
Deputy Governor Zou Lan explained that the primary purpose of overnight reverse-repo operations is to manage ultra-short-term liquidity rather than to influence the interest rate. He emphasized that the seven-day reverse-repo rate remains the main policy rate at this stage.
Background & Context
Earlier in the month, Zou Lan indicated that the PBOC would gradually increase the frequency of overnight reverse-repo operations to flexibly address short-term liquidity conditions. The July 29 operation follows that guidance and maintains the rate unchanged from the previous late-June round, signaling continuity in the central bank’s short-term liquidity strategy.
Why It Matters
By keeping the overnight rate steady while injecting large volumes of yuan, the PBOC aims to ensure sufficient day-to-day liquidity for banks. This approach helps stabilize short-term funding markets without altering broader monetary-policy signals, supporting the smooth functioning of China’s banking system amid ongoing liquidity management efforts.
