The People’s Bank of China (PBOC) began a new series of overnight reverse repos on Oct. 21, supplying 80 billion yuan as it weighs shortening its main market operation from seven days to one.
Announced on Oct. 20, the schedule covers operations through Nov. 2 and sets a daily ceiling of 1 trillion yuan. The PBOC said the arrangement is intended to better match banks’ short-term liquidity needs. Its Oct. 21 notice recorded no seven-day reverse repos that day.
The move follows a policy review by PBOC Governor Pan Gongsheng. He said DR001, the overnight interbank repo rate, has become the rate the central bank effectively targets, while its main operation still runs on a seven-day term. Pan said an overnight term could give the PBOC more precise control over interest rates. The bank is studying the change, but has set no timetable. The proposal was also covered in an earlier account of the PBOC’s plans.
The one-day tool has appeared in earlier scheduled windows: June 29-30 and Sept. 28-Oct. 8. The latest run extends its use through Nov. 2. The PBOC has not stated an overnight operation rate in its schedule or the Oct. 21 result. Its seven-day reverse repo operation on Oct. 19 carried a 1.40% rate; that figure applies to the seven-day operation.
Pan described a possible shift as part of a gradual change to the monetary policy framework. He said some financially strong companies might eventually negotiate floating-rate loans tied to an overnight rate, while the loan prime rate could remain a reference for small businesses and personal loans.
Bloomberg News reported that Société Générale economist Michelle Lam saw a change as possible as early as the fourth quarter of 2026. The report also cited Tianfeng Securities analysts who expected the overnight operation rate to become the formal benchmark in the first half of 2027. Those are analyst forecasts; the PBOC has announced no switch date. Daily operation amounts and any disclosed overnight rate are among the details to watch through Nov. 2.
