The central bank: Conducted 800 billion yuan of outright reverse repurchase operations

The People’s Bank of China (hereinafter referred to as the “PBOC”) has recently issued an announcement. On April 7, the PBOC conducted RMB 800 billion in buyout-style reverse repo operations via fixed-amount, interest-rate bidding, and a multiple-price winning approach. The term is three months (89 days), and the maturity date is July 5, 2026.

Data show that in April, RMB 1.1 trillion of three-month buyout-style reverse repos will mature, meaning that three-month buyout-style reverse repo operations in the month were reduced in volume while rolling over, with a reduced scale of RMB 300 billion. In addition, since early April, the PBOC has also carried out “record-low” reverse repo operations consecutively on April 1, April 2, and April 3.

“We believe that the consecutive reduction in volume of rollover for three-month buyout-style reverse repo operations is consistent with the recent consecutive ‘record-low’ operations in the open market. The main reason is that market liquidity has been relatively loose since early April.” Wang Qing, Chief Macro Analyst at Oriental Jincheng, said.

Wang Qing said that in recent days, the average overnight pledged repo rate for deposit-taking financial institutions (DR001) has continued to run below 1.3%. On April 2, the yield on one-year negotiable certificates of deposit (AAA-rated) issued by commercial banks fell below 1.5%, reaching a historical low. All of these are at relatively clearly low levels. The underlying drivers mainly include the PBOC’s large-scale net injections of medium-term liquidity of RMB 1.9 trillion through the Medium-Term Lending Facility (MLF) and buyout-style reverse repos in January and February, as well as a relatively lower net financing scale for government bonds in March.

Song Qi, an analyst at China Venture Securities, further analyzed and pointed out that since March, buyout-style reverse repos have gradually shifted from a state of net injection to a state of net repayment, which is the first time since June 2025. In mid-April and at month-end, the maturing amounts of six-month buyout-style reverse repos and MLF were both RMB 600 billion. Given that current financial institutions have limited demand for PBOC liquidity, it is not ruled out that the state of reduced-volume injections will continue.

“Near-term funding conditions may remain loose. Any funding shortfall may become evident in late April. If the PBOC’s operations are restrained, it is not ruled out that funding prices may rise modestly at the margin.” Song Qi said.

Lin Yiheng, an analyst in the macro strategy department of Southern Fund, said that the PBOC’s pre-announced plan to conduct RMB 800 billion in three-month buyout-style reverse repo operations this time overall reflects strong forward-looking capabilities and rhythm management. Overall, against the backdrop of marginal improvement in current economic fundamentals, the PBOC’s operations place more emphasis on “stability without looseness, looseness with appropriate degree.” Through precise hedging and a combination of structural tools, it maintains liquidity that is reasonably sufficient but not excessively loose, leaving room for future policy actions.

（Source: Economic Information Daily）