The People’s Bank of China just funneled 398.5 billion yuan, roughly $55 billion, into the financial system through 7-day reverse repurchase agreements. The rate stayed exactly where it’s been since May 2025: 1.40%.
What the PBOC is actually doing
Reverse repos are essentially short-term loans the central bank makes to commercial banks. The PBOC hands banks cash for a week, takes government bonds as collateral, then the banks hand the cash back when the loan expires.
On June 23, the PBOC ran a 662.5 billion yuan operation. A few weeks later, on July 14, it pushed another 236.5 billion yuan (around $33 billion) into the system.
On June 29, it launched a brand-new overnight reverse repo facility at an initial rate of 1.25%. That 300 billion yuan injection through the overnight tool gave the central bank a more precise instrument for managing day-to-day liquidity needs.
