The People's Bank of China announced on October 14th that it will launch a 600 billion yuan 6-month (182 day) buyout reverse repurchase operation on October 15th through a fixed quantity, interest rate bidding, and multi price bidding method. Industry insiders have stated that this operation continues the central bank's medium-term regulatory strategy of "stabilizing the market with quantity", indicating that monetary policy continues to maintain a stable and loose orientation. With the gradual concentration of expiration pressure, the increase in volume renewal aims to stabilize fluctuations. Wang Qing, Chief Macro Analyst of Dongfang Jincheng, told Shanghai Securities News reporters that on October 15th, 800 billion yuan of 3-month buyout reverse repurchase expired, and the central bank launched 600 billion yuan of 6-month reverse repurchase at this time, which will help smooth out short-term capital fluctuations and maintain stable and abundant liquidity. According to the data, a total of 500 billion yuan of 6-month buyout reverse repurchase expired in October, and this 600 billion yuan operation means that the term will be extended by an additional 100 billion yuan. Previously, the central bank launched a 1.1 trillion yuan 3-month buyout reverse repurchase on October 9th, which was 300 billion yuan more than the 800 billion yuan due amount in the same month. Based on comprehensive calculations, the total net investment for the two term operations in October was approximately 400 billion yuan, an increase of 100 billion yuan compared to September. This is the central bank providing medium-term liquidity to the market through buyout style reverse repurchase for five consecutive months. The increase in volume in this round of operations is related to the increase in financial disturbances in October. Wang Qing believes that government bonds are still in the centralized issuance stage in October, and the National Development and Reform Commission is accelerating the landing of 500 billion yuan of new policy financial instruments, which is expected to drive an increase in supporting loan investment. Combined with the "deposit relocation" effect brought about by the strengthening of the stock market, the demand for market funds has gradually increased. In this context, the central bank injects medium-term liquidity into the banking system through buyout style reverse repurchase, which helps to hedge liquidity tightening pressure, stabilize the pace of government bond issuance, and guide financial institutions to increase credit injection. ”Wang Qing said. This operation not only reflects the direction of continuous strengthening of quantitative tools, but also sends a signal that monetary policy will continue to maintain a supportive stance. In addition, with the recent intensification of external market volatility, the central bank's moderate increase in operational scale will also help stabilize market expectations and investment confidence. Looking ahead to future operations, Wang Qing predicts that the 700 billion yuan MLF will expire in October, and the central bank may continue with an equal or slight increase in volume. Overall, the central bank will use a combination of buyout reverse repurchase and MLF policy tools to continuously inject medium-term liquidity into the market. However, in the coming period, the scale of mid-term liquidity increase may decline compared to the previous monthly level of 600 billion yuan. One main reason is that there is a possibility of the central bank implementing a new round of reserve requirement ratio cuts in the fourth quarter. ”Wang Qing analyzed that with the current external environment fluctuations, changes in economic growth momentum, and moderate price trends, coupled with the stabilizing demand in the real estate market, and the accelerated landing of 500 billion yuan of new policy financial instruments, the policy of stabilizing growth is expected to be further strengthened. It is expected that the downgrade will serve as a complementary measure to inject longer-term, low-cost liquidity into the market. Regarding the future trend of funds, market institutions generally believe that short-term liquidity is generally stable. Huachuang Securities research report believes that the central bank's recent operations continue to follow the "forward-looking care" approach. Since June, the monthly average net investment scale of buyout reverse repurchase has remained at around 300 billion yuan. If the funding situation tightens in the future, the central bank may still hedge by continuing to engage in excess MLF. Overall, the funding gap is limited, and the central interest rate is likely to remain stable at around 1.5%. Huachuang Securities stated that from August to September, the DR007 interest rate remained in a range slightly higher than the policy rate. Although there was a brief fluctuation at the end of the season, the central bank effectively smoothed out the disturbance in the funding situation in early October by increasing the 14 day reverse repurchase and pre buyout reverse repurchase. Looking ahead to the fourth quarter, the overall stratification pressure of non bank institutions is at a low level, and the degree of structural tension in the market is controllable. (New Society)