China’s PBOC keeps liquidity taps open with 7 billion yuan injection as new overnight repo tool reshapes money markets

The People’s Bank of China injected 7 billion yuan through 7-day reverse repurchase agreements at a rate of 1.40%, maintaining the benchmark short-term funding cost at its historic low.

The real story isn’t today’s relatively small injection. It’s the PBOC’s debut of an entirely new overnight reverse repo facility on June 29, 2026, which launched with a 300 billion yuan injection at a rate of 1.25%. Alongside the overnight injection, the PBOC also conducted 157.5 billion yuan in standard 7-day reverse repos on June 29.

The very next day, June 30, the central bank deployed that same overnight tool again, this time pumping 600 billion yuan into the system. That’s nearly a trillion yuan in overnight funding across just two days, at a rate 15 basis points below the standard 7-day facility.

Overnight interbank repo transactions account for over 80% of turnover in China’s money markets, and the PBOC just gave itself a direct lever to influence that market segment.

Alongside the overnight injections, the PBOC also conducted 69.5 billion yuan in standard 7-day reverse repos on June 30 at the familiar 1.4% rate, keeping its existing framework intact while layering on the new instrument.

The PBOC has scheduled a 1-trillion-yuan outright reverse repo operation for July 6, 2026, designed to ensure the banking system has ample liquidity heading into the summer months. The 7-day reverse repo rate has held steady at 1.4% since its adjustment to that record low in May 2025.

The timing is also notable. Quarter-end and month-end periods typically see tighter liquidity conditions as banks scramble to meet regulatory requirements and settle accounts. The PBOC’s aggressive injections around June 29-30 suggest the central bank was specifically targeting these seasonal pressure points.

Traders should also monitor the new overnight repo facility closely. If the PBOC continues to price overnight funding at 1.25%, it effectively creates a lower floor for short-term rates in China’s money markets. That 15-basis-point gap between overnight and 7-day rates could compress, pulling the entire funding curve lower without a formal policy rate adjustment.

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