PBOC to Conduct 1.2 Trillion Yuan Outright Reverse Repo Operation on October 8 with a Three-Month Term

The People's Bank of China (PBOC) announced on September 30 that it will conduct a 1.2 trillion yuan outright reverse repo operation on October 8 through a fixed-quantity, interest-rate tender with multiple-price allocation, with a term of three months (89 days). Given that 1 trillion yuan of this tenor matures during the month, the three-month outright reverse repo operation will be an increased rollover, with a net injection of 200 billion yuan.

After equal rollovers of outright reverse repos in both tenors in September, the three-month outright reverse repo shifted to an increased rollover in October to keep liquidity in the banking system ample.

Wang Qing, chief macro analyst at Orient Gold Credit, told reporters that macro policy is tilting further toward supporting growth, including accelerating government bond issuance and expediting the rollout of the 800-billion-yuan new-type policy-based financial instruments, which requires the PBOC to provide liquidity support. This means that in the near term, medium-term liquidity tools including the medium-term lending facility (MLF) and outright reverse repos are expected to continue to be rolled over in increased volumes, supporting government bond issuance and banks' matching credit extension.

The PBOC's Monetary Policy Committee stated at its third-quarter 2026 regular meeting, held recently, that in the next stage it will comprehensively employ and timely adjust monetary policy tools to keep liquidity ample.

In recent years, China has moved further toward a price-based monetary policy framework, with open market operation volumes serving interest rate control targets more than anything else. Since September 20, money market rates have declined somewhat, with the overnight funding rate (DR001) and DR007 staying below the policy rate level of 1.4%.

To better match the short-term liquidity needs of the banking system, the PBOC had already acted: it conducted overnight reverse repo operations from September 28 to October 8 to "shave peaks and fill valleys," and on September 28 it also conducted a 300-billion-yuan 14-day reverse repo operation through a fixed-quantity, interest-rate tender with multiple-price allocation.

(Source: Securities Times)