On July 13, the People’s Bank of China (PBOC) carried out RMB 224 billion of 7-day pledged reverse repo operations via fixed-rate quantity bidding, fully meeting demand from primary dealers, with the operation rate kept unchanged at 1.40%. Given that RMB 7 billion worth of 7-day reverse repos matured on the same day, the central bank achieved a net liquidity injection of RMB 217 billion via reverse repos under open market operations.
For last week (July 6 – July 10), the PBOC conducted a total of RMB 62 billion in 7-day pledged reverse repos, while RMB 678.5 billion matured in the same period, resulting in a net liquidity withdrawal of RMB 616.5 billion through reverse repos. Separately, on July 6, the PBOC launched RMB 1 trillion of 3-month outright reverse repos. After offsetting maturing 3-month outright reverse repos worth RMB 800 billion, the operation delivered a net injection of RMB 200 billion.
Tan Yiming, Chief Fixed-Income Analyst at TF Securities, told reporters that interbank funding conditions remained balanced and loose last week. The net withdrawal via 7-day reverse repos was consistent with regular operational patterns at the start of a quarter, while the net injection through 3-month outright reverse repos sent a clear signal that the PBOC is actively safeguarding stable liquidity. Major liquidity disruptions for this week will stem from rising net subscription payments for government bonds and tax outflows in the latter half of the week. The central bank is expected to launch precise offsetting operations, and overall funding pressure should remain manageable.
In Sun Binbin, Chief Economist at Caitong Securities’ view, the PBOC’s operations followed a clear trend of “withdrawing short-term liquidity while injecting medium- and long-term liquidity”. Short-term funds injected ahead of the quarter-end matured naturally last week, while the central bank rolled over 3-month outright reverse repos on an oversubscribed basis to inject a net RMB 200 billion and lock in medium- and long-term liquidity. Seasonally speaking, net liquidity withdrawal is typical in the first and middle ten days of July each year, representing a routine reabsorption of short-term cross-quarter funds rather than a shift toward liquidity tightening. With mounting liquidity disturbances looming this week, the PBOC may step up the scale of open market operations.
The Monetary Policy Committee of the PBOC recently held its Q2 2026 regular meeting. The meeting stressed that China will continue to implement an appropriately accommodative monetary policy and ramp up counter-cyclical and cross-cyclical adjustments. Compared with the Q1 meeting, this quarter’s session added the phrasing “make monetary policy more forward-looking, flexible and targeted” to its outline of core monetary policy thinking for the next stage, while deleting the statement “employ a full range of tools to strengthen monetary policy regulation”.
A research note from Everbright Securities analyzed that this signals regulatory management will feature more “forward planning, discretionary adjustments and targeted drip irrigation”. Under the overall framework of accommodative aggregate liquidity, the central bank will calibrate the pace of tool injections, roll out policy arrangements in advance to stabilize market expectations and smooth out volatility. Monetary policy tools will be adjusted in a discretionary manner to prevent persistently excessive liquidity. Meanwhile, the central bank will scale back aggregate stimulus and strengthen structural guidance, channeling financial resources to priority areas including domestic demand expansion, technological innovation and micro, small and medium-sized enterprises (MSMEs). The likelihood of reserve requirement ratio (RRR) or interest rate cuts in the near term remains low.
Sun Binbin commented that the monetary policy stance stays “appropriately accommodative”, and the probability of deploying aggregate quantitative policy tools in the short run has declined. (Outlook New Era)
Edit：Liu Zhiyu Responsible editor：Li Yulu
Source：http://www.zqrb.cn/
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