China’s central bank replaces the 7-day reverse repo with daily overnight liquidity at a fixed 1.25% rate, marking an explicit easing step.
MoneyTurkey Foreign Markets Desk | 2 November 2026
Key points
- The PBoC now conducts daily overnight liquidity injections at a fixed 1.25% rate, replacing the 7-day reverse repo as the policy benchmark.
- The offshore yuan reached its strongest level since June 2022 following the announcement.
The People’s Bank of China has shifted its main policy tool to an overnight repo operation at a fixed 1.25% rate. The move replaces the 7-day reverse repo and is part of a broader transition to an overnight-rate framework. Caixin reported the change on 30 October 2026. The explicit rate cut and clearer policy signal are expected to support risk assets and compress benchmark yields.
What happened
The central bank now runs daily overnight liquidity injections at a fixed 1.25% rate. This replaces the 7-day reverse repo as the policy-rate benchmark. Caixin reported the formal switch on 30 October 2026. The change is part of a broader shift toward an overnight-rate framework.
Why markets care
The explicit rate cut and clearer policy signal should lift risk appetite. This supports the CSI 300 and Shanghai Composite. Lower benchmark yields are likely to compress CGB 10-year yields. The move also keeps the CNY bid, according to the desk note in the Caixin report.
Reuters and Bloomberg both covered the announcement. Their headlines noted easier funding conditions and the overnight rate at 1.25% before the policy anchor shift.
Local context
The offshore yuan reached its strongest level since June 2022 after the announcement. The PBoC’s move provides a clearer policy signal than previous operations. The overnight framework replaces the previous 7-day reverse repo as the main benchmark.
What to watch
- Daily overnight repo operations at 1.25%
- CSI 300 and Shanghai Composite reaction
- CGB 10-year yield moves
- Offshore yuan trading levels
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For information only. Not investment advice.
Sources
- 财新: https://news.google.com/rss/articles/CBMiYkFVX3lxTE9Mc3NzVlJxUC1GQ2Jybi00TDdYc3VfZ0k3UGtzOURjQjhnYkdsX0VWZkRjeDgtaEtoZC1DeEZ0X0RlZ0ZXTTJuak1zWXRWTGlIMDI3eHYtTWI0Sml6WHBKNnFB?oc=5
- Reuters: https://news.google.com/rss/articles/CBMiugFBVV95cUxQR1Y5OGZoNEh2ZzdKN3pfVGlFWG8zT0tUdk9xOXQ2T0JfVlREREdhUWhpaFlTZmJPMV8wZ0h5SUg2YWd1bHA5M3FIaVFBZUdwbG1sbi0xMnNXdDFVNWotcmJTbHpCZWhCV0stcDd2WDFvcTZ6RkxsQ050V2ltZW5UUFgxcUk2ei0xQjROZENtTXdPX1A3ZGJ5RWluMVV5eHdvUThnbVdpb19vaTA0RGR5ZWVyLVg2bVh6Q2c?oc=5
- Bloomberg: https://news.google.com/rss/articles/CBMiswFBVV95cUxQV2VqYzFqUFRRckRPOVdEaDVwN3hwZmJwek5RRzV5RE1BUXlhRUUxY1JEUnRJeEljMnNOSUJVQjVWelB1SGdfaTF1emg0TXBSSHdVdHhSZGFJOEJuZVNBM1RiTWdLZkt6MUY3blZyTFNqS3Z0NEM0N0JpRjlpbGxqemxJVzBBTzExRzJSNUdkdW1kT0VsTERwTzFXUkdJODlTT2tINk1YWDVvaU5TTlRnTFVEMA?oc=5
