China’s central bank reset temporary overnight repo and reverse repo rates, creating a narrower corridor for the overnight interbank repo rate to curb short-term funding volatility.
The tighter band is expected to limit intraday swings in borrowing costs while also pulling both the upper and lower bounds lower, reinforcing expectations of cheap liquidity.
Analysts say that combination should support China’s bond market by making near-term liquidity conditions more predictable.
The move marks a refinement of the PBOC’s monetary policy toolkit, using rate-corridor design rather than broad easing to stabilize money markets.