China's central bank to conduct 1-trillion-yuan outright reverse repo operation

The People's Bank of China (PBOC), the country's central bank, said Thursday that it will conduct a 1-trillion-yuan (about 139 billion U.S. dollars) outright reverse repo operation on Friday to maintain ample liquidity in the banking system.

The operation will carry a three-month tenor and be conducted using a fixed-quantity, interest-rate-bidding and multiple-price-bidding method, according to the PBOC statement.

The move is expected to ensure sufficient liquidity in the banking system, keep fluctuations in money markets under control and anchor market expectations, said Wang Qing, chief macro analyst at Golden Credit Rating.

He added that stepped-up medium-term liquidity injections signal a broader use of quantitative tools to bolster counter-cyclical regulation.

Outright reverse repo operations -- a tool the central bank introduced in October 2024 to manage liquidity in the banking system -- are carried out once each month with a tenor of no more than a year.

This new option has enriched the country's monetary policy toolkit following the introduction of temporary repos, temporary reverse repos, and the buying and selling of treasury bonds.