China’s central bank replaces the 7-day reverse repo with the overnight rate as the new benchmark, tightening the front-end of the CGB curve.

MoneyTurkey Foreign Markets Desk | 1 November 2026

Key points

• The PBOC formally replaced the 7-day reverse repo with the overnight rate as the new policy benchmark effective 30 Oct.
• The overnight rate is set at 1.25% and daily overnight reverse repos begin on 2 Nov.

The People’s Bank of China has completed its shift to an overnight-rate framework. The central bank now uses the overnight reverse repo rate, fixed at 1.25%, as its main policy signal instead of the 7-day rate. The change took effect on 30 Oct and is described as a finished transition in the monetary-policy framework.

What happened

The PBOC announced the overnight rate at 1.25% ahead of the formal switch. From 2 Nov the bank will conduct daily overnight reverse repos. The 7-day reverse repo will no longer serve as the primary policy anchor.

Caixin reported the move as a completed shift in the monetary-policy framework. Bloomberg and Reuters both carried headlines confirming the overnight rate as the new benchmark. BigGo Finance noted the daily operations will begin on 2 Nov.

Why markets care

The new overnight anchor is expected to tighten the front-end of the CGB yield curve. Desk notes suggest the 10-year CGB spread may compress as the policy signal moves closer to the money-market rate. Equity indices are seen as likely to show limited immediate reaction.

A clearer overnight policy rate could support the CNY by reducing ambiguity around short-term funding costs. The change removes the previous gap between the 7-day repo and the actual overnight funding level.

Local context

The PBOC has gradually increased the weight of overnight operations in its open-market toolkit. The shift aligns daily liquidity management with the rate that banks actually use for short-term funding. Chinese media framed the move as the final step in a multi-year transition.

What to watch

• Daily overnight repo volumes after 2 Nov
• Front-end CGB yield moves versus 10-year spread
• PBOC statements on the new policy framework

For information only. Not investment advice.

Sources

• 财新: https://news.google.com/rss/articles/CBMiYkFVX3lxTE9Mc3NzVlJxUC1GQ2Jybi00TDdYc3VfZ0k3UGtzOURjQjhnYkdsX0VWZkRjeDgtaEtoZC1DeEZ0X0RlZ0ZXTTJuak1zWXRWTGlIMDI3eHYtTWI0Sml6WHBKNnFB?oc=5
• Bloomberg: https://news.google.com/rss/articles/CBMiswFBVV95cUxQV2VqYzFqUFRRckRPOVdEaDVwN3hwZmJwek5RRzV5RE1BUXlhRUUxY1JEUnRJeEljMnNOSUJVQjVWelB1SGdfaTF1emg0TXBSSHdVdHhSZGFJOEJuZVNBM1RiTWdLZkt6MUY3blZyTFNqS3Z0NEM0N0JpRjlpbGxqemxJVzBBTzExRzJSNUdkdW1kT0VsTERwTzFXUkdJODlTT2tINk1YWDVvaU5TTlRnTFVEMA?oc=5
• Reuters: https://news.google.com/rss/articles/CBMi0AFBVV95cUxPeVdpV3d2UGwyVHFBR2lNS1JNaUxINlpjVXppYjNiSVc2QUtoa3RISFhVcUZFeEppWHlBTmJoRko2dEpJSjNwb2NfVDJMMVp5bGp5VUtBb1ZnYjZ2NXRKUjlwRi0wSmNYblh1TU5iNE5odmtRN09uZ1Ryemx1dzJQYmpsRVpXRS1yQUl5MzRWZVMzSXJvNW03UHBodmZHbm9tMXhwZFFiVXE2ZEpJTi05TVJpWHItRF9zbG9MRmVpSFhtVFVvc3V2TnBFOWExeXVq?oc=5
• BigGo Finance: https://news.google.com/rss/articles/CBMidkFVX3lxTE1wWkw0WmNOUWhaeVpqcm5ZSEdwSVZTSGJYeThCczVnVkxCUWN4SmR5WXB5S0JET19hemVPSVRLdzJPZlVnRFRJLThlY3BwNFg2RHcwcU5zSHFoa09VaHRPX0tXRENpc18ySVM4S0ZwX0trVVdZR2c?oc=5
• Briefs Finance: https://news.google.com/rss/articles/CBMikgFBVV95cUxPSVZrYXMtVU1MSFIxeFNkYm03bHFaZC1YcTdnX0hqQ2Z3d3hLak5QRERwSVNfYmktNEtTdFlwLWFwa2pnS3pVOGh2WlBOMVRhV1RSNEQ4ZGpLZUt1NHB0bnRNWjdoeUt0VDlxcHJDaldJRlR2TUxUWnNlTGFzaEZ2NTZFUDNtUmVlcjh2ODA0cHZ3UQ?oc=5