China injects 5 billion yuan via 7-day reverse repos at 1.40%

The People’s Bank of China pumped 5 billion yuan into the financial system through 7-day reverse repurchase agreements at a fixed interest rate of 1.40%, maintaining the rate that has served as the central bank’s primary policy benchmark throughout 2026. After accounting for maturing instruments, the net liquidity injection came to roughly 4.5 billion yuan. A small number with a big signal The PBOC has kept its 7-day reverse repo rate pinned at 1.40% across multiple operations this year, making the rate effectively the floor for short-term borrowing costs in China’s interbank market. Analysts have interpreted the pattern of small or even zero 7-day injections during recent weeks, particularly in August, as evidence that liquidity in the system is already adequate. New tools in the toolkit In late June 2026, the PBOC introduced overnight reverse repo operations, priced at an effective rate of 1.25%, which sits 15 basis points below the 7-day rate. The shorter tenor gives the central bank a more precise instrument for addressing very short-term cash crunches, the kind that tend to pop up around month-end settlement dates or tax payment deadlines. The PBOC announced it would conduct d...