China central bank to inject 1.1 trillion yuan via reverse repo to support liquidity

BEIJING: China’s central bank, the People’s Bank of China, has announced that it will conduct a 1.1 trillion yuan outright reverse repo operation on January 8 as part of its efforts to ensure sufficient liquidity in the banking system.

The operation will be carried out through interest rate bidding with a fixed quantity, and winning bids will be determined at multiple price levels. The maturity period of the transaction has been set at three months.

Since an equivalent amount of 1.1 trillion yuan in three month reverse repos is scheduled to mature in January, the latest operation effectively represents a full rollover, allowing liquidity conditions in the banking system to remain stable.

According to Wang Qing, chief macro analyst at Golden Credit Rating, the move reflects the continuation of an accommodative monetary policy stance. He noted that the measure will support government bond issuance at the beginning of the year and help financial institutions sustain the pace of monetary and credit expansion.

The People’s Bank of China introduced outright reverse repo operations in October 2024 as part of its evolving liquidity management framework. The instrument, with maturities of up to one year, is now conducted on a monthly basis and complements existing tools such as temporary repos, temporary reverse repos, and open market treasury bond transactions.

Market participants view the operation as a signal of Beijing’s intent to maintain steady policy support amid ongoing economic adjustments.