China injects 18 billion yuan via 7-day reverse repos at 1.40% as PBOC keeps liquidity taps open

The People’s Bank of China pumped another 18 billion yuan (roughly $2.5 billion) into the financial system through 7-day reverse repos, keeping the rate pinned at 1.40%. It’s a modest injection by PBOC standards, but it fits neatly into a broader pattern of deliberate liquidity management that has defined China’s monetary approach through 2026. For those unfamiliar with central bank plumbing: a reverse repo is essentially the PBOC lending cash to commercial banks for a short period, using government bonds as collateral. The 1.40% rate tells the real story The 7-day reverse repo rate has become China’s de facto primary policy rate, and it has held firm at 1.40% across recent operations. Between 2022 and 2024, the PBOC conducted similar-sized 18 billion yuan injections, but those came at significantly higher rates averaging around 1.80%. The 40-basis-point decline from that average to the current 1.40% reflects a meaningful shift in the central bank’s stance over the past two years, one designed to keep borrowing costs lower and credit flowing through an economy that has faced persistent headwinds. Month-end mechanics and new tools This particular operation comes against a backdrop o...